Here are the main takeaways from Meta’s Q4 2024 earnings call:
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CEO Mark Zuckerberg said he believes 2025 to be the year when it will become possible to build an AI engineering agent that has coding and problem-solving abilities of a mid-level engineer, an historic milestone that over time can be a very large market though their extensive usage could come in 2026 and beyond.
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Zuckerberg said it’s too early to have a strong opinion on the trajectory of infrastructure and Capex following DeepSeek’s news but he thinks that investing heavily on them is going to be a strategic advantage over time. He thinks that the cost of Ai might shift in future from pre-training the model to inference. He also noted that they will implement AI in their core products ( feeds and ad products) which are used by billions of people, and that will be costly.
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CFO Susan Li said advertising demand remains strong.
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Li said the adoption of Advantage+ shopping campaigns continues to grow.
“Adoption of Advantage+ shopping campaigns continues to scale, with revenue surpassing a $20 billion annual run-rate and growing 70% year-over-year in Q4,” she said.
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Li said growth in ad impressions was mainly driven by Asia-Pacific.
Assessment of Meta’s earnings
Q4 was another solid quarter for Meta. In my opinion, the lower than expected revenue guidance for Q1 shouldn’t be a concern since it’s something outside the company’s influence. We were already expecting such a scenario as well.
Li’s comment that Advantage+ shopping is doing very well is a relieve given the earlier reports that said Meta was backing off from it due to some issues.
I didn’t like that ad impression growth was mainly driven by Asia-pacific and not high monetizing regions such as Europe and the US. Also, in my opinion, Zuckerberg in his comments, seemed to underestimate the potential of already existing AI agents such as the Open AI’s Operator.
Overall, the company’s trajectory continues to impress. Spending on capex and total expenses could be an headwind in the short-term, but I have always liked that these AI spendings also support the core business. I also liked that Zuckerberg seemed more confident about 2025, saying that this is the year when trajectory of most of their long-term investments will become clearer.