Which metaverse? Meta says its biggest single investment now is in “advancing AI.”

CNN
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About a year and a half after Facebook renamed itself “Meta”. The tech giant said it will be fully focused on building a future version of the internet dubbed “Metaverse.” Now he says his top investment priority will be the advancement of artificial intelligence.

in one letter CEO Mark Zuckerberg announced plans to employees on Tuesday lay off another 10,000 employees in the coming months, doubling down on its new focus on “efficiency” for the company. The pivot to efficiency, first announced last month Meta’s quarterly earnings statement, comes after years of investing heavily in growth, including in areas with unproven potential like virtual reality.

Now, according to Zuckerberg, the company will focus primarily on cost cutting and streamlining projects. Building the metaverse “remains central to defining the future of social connection,” Zuckerberg wrote, but Meta will not invest most of its capital there.

“Our biggest single investment is to push AI and build it into every one of our products,” Zuckerberg said Tuesday. Noting how AI tools can help users of his apps express themselves and “discover new content,” he said new AI tools can be leveraged to increase efficiency internally by “helping engineers help to write better code faster”.

The comments follow what the CEO described as a “humbling wake-up call” last year as “the global economy changed, competitive pressures increased and our growth slowed significantly.”

Meta and its predecessor Facebook were involved AI research for years, but the remarks come amid an aggravated AI frenzy in the tech world that began in late November when the Microsoft-backed OpenAI released ChatGPT publicly. The technology quickly went viral because of its ability to generate convincing, human-sounding responses to user input, and then apparently sparked an AI arms race among tech companies. Microsoft announced In early February, the company announced that it was integrating the technology behind ChatGPT into its Bing search engine. A day before Microsoft’s announcement Google has unveiled its own AI-powered tool named bard. And not be left behind announced meta Late last month, it announced it was forming a “top-level product group” to “supercharge” the company’s work on AI tools.

“I think it’s a good thing to focus on AI,” Ali Mogharabi, a senior equities analyst at Morningstar, told CNN of Zuckerberg’s comments. Mogharabi said Meta’s investment in AI would have “mutual benefits” because it could improve efficiency for engineers building products and because integrating AI capabilities into Meta’s suite of apps could potentially create more engagement time for users which could then increase advertising revenue.

And in the long run, according to Mogharabi, “many of the investments in AI and many improvements that result from those investments in AI could actually be applicable to the entire Metaverse project.”

But Zuckerberg’s focus on investing in AI and leveraging the popular technology’s tools to make the company more efficient and increase its bottom line is also “what shareholders and the market want to hear,” Mogharabi said. Many investors had previously martyred about the company’s metaverse ambitions and spending. In the year 2022, Meta lost more than $13.7 billion in his “Reality Labs” unit, which houses his Metaverse efforts.

And investors seem to be welcoming Zuckerberg’s shift in focus from the metaverse to efficiency. After losing in 2022, Meta’s stock is up more than 50% year-to-date.

Angelo Zino, a senior equities analyst at CFRA Research, said Tuesday that the second round of layoffs at Meta “officially convinces us that Mark Zuckerberg has completely shifted gears and changed the company’s story to be more about efficiency than efficiency focus.” let the metaverse grow at all costs.”