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In this vigorous global AI war, there is one major company that is not so prominent:

Meta。

Microsoft, Google, and OpenAI all have their own core killer products. Every press conference is like a competition, and they drop a bombshell from time to time.

Meta, as one of the five major technology giants, has its own AI laboratory and Turing Award winner Yan LeCun, but it seems to be left far behind.

But now, Meta seems to be back on the stage.

01 From laying off 10,000 employees to the strongest financial report in history

In the past few days, Meta announced its second quarter financial report for 2024:

Total revenue was US$39.07 billion, up 22% year-on-year, and net profit was US$13.465 billion, up 73% year-on-year.

Both indicators exceeded expectations, which is a relief given the disappointing performances delivered by giants such as Google and Microsoft.

After the financial report was released, Meta's stock price rose by 7%. Citi, JPMorgan Chase, CICC and others said that they are gradually optimistic about Meta and it is the preferred stock in this industry.

One quarter earlier (Q4 of fiscal year 2023), Meta delivered the "strongest" financial report in history:

The market expected revenue of US$38.9 billion, but actual revenue was US$40.111 billion, a year-on-year increase of 25%, the largest increase since the third quarter of 2021.

Net profit? $14.017 billion, up 201% year-on-year.

According to statistics, on the same day, Meta rose by 23.10% during intraday trading, and its total market value reached 1.22 trillion US dollars, an increase of nearly 200 billion US dollars in one day, setting a record for the highest single-day market value increase in the history of U.S. stocks.

(Because of its outstanding performance, Meta's 2023 year-end bonus will be paid at 1.5 times the amount it earned, which is enviable.)

Compared with 2022, which hit rock bottom, these two consecutive quarters of good performance make people sigh:

Has Meta finally stepped out of the shadow of the Metaverse?

Let’s go back to 2021, the so-called “first year of the metaverse”.

Zuckerberg announced a decision that shocked the world at his own developer conference:

Changing the name to "Meta" - the company's name "Facebok" in 2017 was changed to "Meta" overnight, and the company's business was fundamentally reformed, threatening to transform from a social media to a metaverse company.

At this conference, Zuckerberg devoted himself to describing the future world he hoped for:

"This is an immersive internet where you don't just use it or look at it, you are in it."

"Your TV, work computer, phone, board games, and more are no longer physical objects assembled in a factory, but holograms designed by creators around the world."

"In this future, you could be instantly transported to your office via hologram, eliminating the need to commute."

"……"

In response, netizens simply didn’t believe it, and all kinds of mocking memes were flying everywhere:

About three months later, in February 2022, Meta released its first financial report after the name change, and what it reaped was the largest single-day market value loss in the history of a US company.

The stock price fell by 26%, and the market value evaporated by more than 250 billion (US dollars)!

The reason is that the daily active users of its apps have been declining, which has cast a shadow on the advertising business that can bring in the bulk of revenue. And what about the Metaverse Department (Reality Labs), which was the most valued by Zuckerberg at the time? It lost $10 billion.

Who can stand this? Suddenly, voices saying "The Metaverse can't save Zuckerberg" were everywhere.

Schadenfreude? No, this is perfect prophecy.

Less than a year after the name change, Meta's hugely invested metaverse application "Horizon Worlds" had less than 200,000 users worldwide when it was launched, and it was the first to receive a wave of negative reviews from its own development team: the quality was too low and there were too many bugs, even the employees themselves were disgusted with it.

And Zuckerberg's "metaverse selfie" in it has become a huge joke.

The series of failures has made many people, including investors, question what Zuckerberg is playing with: Is this the end of the Metaverse that he spent 20 billion on?

That year, the entire technology industry was hit for various reasons, and Zuckerberg's decision to go "all in on the metaverse" undoubtedly made the situation worse.

Ultimately, Meta suffered a serious blow: its performance continued to decline and the company's stock price plummeted 65% year-on-year.

Finally, Zuckerberg also realized the seriousness of the situation (of course the wording of the meeting was "things are clearly not moving in the direction we expected").

Then, we saw tens of thousands of employees being announced as "graduating" at the end of the year, as well as various cost-cutting policies.

CTO Andrew Bosworth made no secret in an interview:

This experience is not only the lowest point in 2022, but it can even be said to be the lowest point in my entire career.

Looking back at 2022, it has indeed been a fantastic past for the tech giant Meta.

Fortunately, this was a man-made dilemma, and Zuckerberg woke up not too late.

In February 2023, about two months after ChatGPT came out, Zuckerberg also announced:

Establish a top product team to focus on AIGC.

Despite the detours, Meta is indeed a mature company. After rapid rectification and refocusing, it quickly began to recover.

Now, more than a year has passed, and Meta has begun to regain market confidence with stable financial results and has begun to show its determination in the field of AI.

02 Zuckerberg’s AI determination

In Meta's latest financial report, the main highlight comes from the digital advertising market where market share continues to grow.

This is Meta's core profitable business, accounting for 98%, mainly contributed by applications such as Facebook, Instagram, WhatsApp and Messenger.

The financial report shows that 3.27 billion people use at least one of the apps every day, of which WhatsApp currently has more than 100 million monthly users in the United States, and Threads (a competitor of Twitter) has nearly 200 million.

Together, these apps helped Meta grow its ad revenue 22% year over year in the quarter, twice as fast as Google’s.

Why is the core advertising business so prosperous? Meta Chief Financial Officer Susan Lee explained in a conference call that it was the help of AI technology.

There are two main factors driving revenue performance: the attractiveness of video and information flow recommendations, and the improvement of advertising monetization efficiency, both of which require the participation of AI.

According to official statements, it is AI that has driven the significant growth of Meta's core business.

There is no doubt that Meta's ambition in the field of AI is far more than just helping the advertising business grow. It also includes big models, AI assistants, Ray-Ban Meta smart glasses, and so on.

Zuckerberg revealed that Meta's AI layout will be long-term and comprehensive - although he also knows that the commercial value of AI cannot be discussed in the short term, not a penny should be spent less now.

Rather than risking a delay in infrastructure development, it is better to prepare in advance.

Although he did not disclose the specific investment amount for next year, he said it would be a huge amount of money.

Yes, at this stage, developing AI is really expensive. Just like what The Information calculated, even a strong company like OpenAI may lose up to $5 billion this year.

However, the market does not seem to be worried about Meta.

This is precisely because the company's core business is performing strongly.

The reason is simple: if a technology company's core business shows weakness, then it is natural to worry about the risks of betting madly on AI, which is like a bottomless pit. Just like YouTube, which is currently performing poorly under Alphabet, Google's confidence seems a little weak.

Compared with other technology companies trying to engage in pure AI business, Meta is more competitive because it has considerable advertising revenue that can be used as a direct "blood transfusion".

While the expense increases may unsettle investors, analysts generally viewed Meta's latest financial results as a sign that it can handle the extra costs.

03 Unique open source strategy

Unlike Google OpenAI's increasingly "closed" approach, Meta's approach is mainly open source.

Its Llama series of large models has always been the strongest open source model in history.

The latest Llama 3.1 with 405 billion parameters has set a new record.

Although its performance indicators did not surpass GPT-4o and Claude 3.5 "super cup" in all aspects, it was enough to gain public recognition and gain another wave of goodwill.

After all, in today's world where OpenAI is ridiculed as "CloseAI", open source seems precious, especially for such a large-scale model.

A large number of individual researchers, small organizations, and startups have benefited from this, enjoying the most advanced large model capabilities without having to own the massive resources required to train a large model from scratch.

There is no doubt that with the support of open source strategy, Meta's image has undoubtedly become more prominent.

It is worth mentioning that Meta itself has a clear understanding of open source strategy:

It is not purely for the benefit of everyone, but also a business strategy.

In the conversation between Zuckerberg and Huang Renxun, Zuckerberg introduced that in terms of open source, Meta actually started relatively late.

Why did Meta decide to open source in the first place? When Meta started to build distributed computing infrastructure and data centers, it found that other technology companies had already laid out their plans. Meta believed that it had no competitive advantage in this area, so it might as well open source it directly.

What surprised Meta a little was that the company actually benefited from the ecosystem surrounding it, with the biggest benefit being open computing - Meta made the relevant server designs, network designs, and even the final data center designs public.

After these designs became industry standards, all supply chains basically followed Meta's standards. Therefore, an open source operation actually saved Meta billions of dollars.

In addition, Zuckerberg also said in last quarter's earnings call that because Meta has unique data and builds a specific set of products, it is not worried that open source (especially the open source Llama series) will weaken its core competitiveness.

These are exactly why Meta has long adhered to the open source common infrastructure strategy, and they firmly believe that this is the right direction for the company to move forward.

It is understood that based on this open source strategy, Meta will build a complete general artificial intelligence technology, including the future Llama 5, 6, and 7.

The Llama 4 that is closest to us is said to be under development. Zuckerberg revealed that it may require 10 times more computing power than Llama 3.

(Hmm, looks like I need to give Huang Renxun a few more leather jackets.)

Finally, to sum up, with the continued recovery of financial report data, we see that Meta is on the right track, breaking away from the shadow of the Metaverse and starting to focus on the field of AI with all its strength. Driven by the open source strategy, Meta has demonstrated unique competitiveness and ambitions for the future.

This makes us have a lot of expectations for it.

Regardless, Zuckerberg has put aside his lofty ambitions:

Meta AI will be the most popular application by the end of the year.

AI will revolutionize all of Meta's products.

Let's wait and see.

04 One More Thing

Starting this year, Zuckerberg's appearance has also begun to change from usual.

The common grey T-shirt + jeans are no longer the standard, and hairstyles have become more trendy.

Some netizens lamented that Zuckerberg finally doesn’t look like a robot anymore (dog head).

Some say that personal style is a communication tool; our appearance conveys a lot about us and influences how people perceive us.

This is especially true for people of Zuckerberg's level.

So on some level, can we see this shift in image as a rebranding of Meta, or is it more in line with the company’s fate and future?