Seoul Gazette - Meta quarterly profit climbs despite big cloud spending

The company reported a $16.6 billion profit in the first three months of the year on revenue of $42.3 billion, with business spending on ads remaining strong.

Shares in the social media giant -- which owns Facebook, Instagram and Whatsapp -- rose more than three percent in after-market trades.

"We've had a strong start to an important year, our community continues to grow and our business is performing very well," said Meta chief executive Mark Zuckerberg.

"We're making good progress on AI glasses and Meta AI, which now has almost one billion monthly actives."

Meta this week unveiled its first standalone AI assistant app, challenging ChatGPT by giving users a direct path to its generative AI models.

Zuckerberg said in an Instagram video post that the app "is designed to be your personal AI" and could be primarily accessed through voice conversations with the interactions personalized to the individual user.

Embracing the company's social media DNA, the app features a social feed allowing users to see AI-made posts by other users.

- Defending the family -

The solid performance comes as Meta defends its "family" of apps in a US antitrust case that could end with the tech firm ordered to spin off WhatsApp and Instagram.

Some 3.43 billion people use apps in the Meta family daily, the tech firm said in the earnings report.

Zuckerberg has denied in court that his company bought rival services Instagram and WhatsApp to neutralize competitive threats as alleged by the Federal Trade Commission.

The earnings also come in the wake of significant shifts in Meta's content policies intended to endear the company to US President Donald Trump.

Analysts were keen to see whether Trump's tariffs would lead to businesses cutting online advertising budgets, weakening Meta's main source of revenue.

"Meta robust earnings show that the company's advertising business remained healthy in Q1, proof that the controversial ending of its fact-checking program hasn’t done much to deter advertisers," said Emarketer analyst Minda Smiley.

"But investors and onlookers alike will be much more concerned with what’s to come in Q2 and beyond considering the wildly different economic environment the company now operates in because of Trump’s tariffs."

Looking ahead, Meta has laid out plans for massive infrastructure investments, with expected capital expenditures of $64-$72 billion for 2025, primarily supporting AI initiatives.

Zuckerberg has warned on previous earnings calls that building AI to serve billions of people will be expensive, and that it could take years to reach the goal.

The company expanded its workforce to 76,834 employees, about 11 percent more than the same quarter last year, according to the earnings release.

While Meta's stock has performed strongly, the company faces both regulatory challenges and emerging competition.

The rise of Chinese startup DeepSeek's more economical AI model has reportedly prompted Meta to establish war rooms to study and potentially adapt the innovations for its own Llama AI models.

V.Pyo--SG