Meta wins back Wall Street with AI promises
Technology
Meta beat expectations for first-quarter profit and revenue
(Reuters) - The company's shares extended their winning streak on Thursday, surging nearly 14% after Meta's focus on AI and cost-cutting cheered investors whose enthusiasm has already helped the social media behemoth nearly double in value in 2023.
Meta, whose stock was trading at an over one-year high, is set to add around $80 billion to its market valuation and overtake Nvidia Corp as the best-performing company in the S&P 500 index on a year-to-date basis, if gains hold.
The rally also lifted other tech companies from Snap Inc. and Pinterest Inc. to Amazon.com Inc. by as much as 3.1%.
"If you want to be treated and valued like a growth stock, you need growth! And this is precisely what Meta delivered returning to growth ... just as questions around a potential recession get louder," Bernstein analyst Mark Shmulik said in a note.
Meta beat expectations for first-quarter profit and revenue, which rose for the first time in nearly a year, the latest sign that American tech giants were digging themselves out of a slump that has sparked tens of thousands of layoffs.
The results also underscored the rising importance of AI, with CEO Mark Zuckerberg saying the tech was helping to boost traffic to Facebook and Instagram and earn more in ad sales.
"We believe AI has played a crucial role in shifting Meta from showing a more limited set of friends, family, and followed content to an almost unlimited set of recommended content now available in Reels and Feed," J.P. Morgan analysts said.
Zuckerberg also said the company, which has carried out several expensive overhauls to bolster its core business, was no longer behind in building out its AI infrastructure.
Shares of America's biggest tech companies including Apple Inc., Microsoft Corp, Amazon and Alphabet Inc. have risen by around a quarter so far this year after a poor 2022.
