Meta Platforms Inc (META) is gearing up to release its third-quarter earnings after the market closes on Wednesday, and a fresh report about the company’s foray into search engine development is creating quite a stir. This news could significantly impact Meta’s AI growth and potentially challenge Google’s dominance in the search market.
Analysts are eagerly anticipating Meta’s earnings report, expecting revenue of $40.27 billion, a substantial increase from last year’s $34.15 billion. The company has consistently surpassed analyst expectations for revenue over the past eight quarters. Earnings per share are projected to reach $5.24, up from last year’s $4.39, marking six consecutive quarters of beating analyst forecasts.
Meta itself has provided guidance, predicting third-quarter revenue to fall within a range of $38.5 billion to $41 billion.
The report by The Information, detailing Meta’s development of a search engine to power its Meta AI chatbot, has piqued the interest of Bank of America analyst Justin Post. Post sees this as a strategic move for Meta to reduce dependence on tech giants like Google and Microsoft. He anticipates that the earnings call will feature discussions on artificial intelligence and search capabilities.
Post believes that Meta’s own search engine could significantly reduce its reliance on Google Search and Microsoft Bing, which currently provide information for Meta AI. This aligns with Meta’s broader goal of decreasing its dependence on competitor platforms.
Post highlights Meta’s substantial user base and vast content library as valuable assets for training its own large language model (LLM). While acknowledging the potential negative impact on Alphabet in the long term, Post noted that the stock did not react to the report. However, he suggests that if users increasingly turn to Meta AI for information, it could lead to a shift in internet traffic away from Google Search.
Analysts are watching Meta’s earnings report closely to see how the company’s AI ambitions translate into tangible results. The company’s progress with Meta AI will be a key focus beyond the potential search engine. Meta CEO Mark Zuckerberg has previously stated that Meta AI is on track to become the most used AI assistant globally by the end of the year.
In addition to AI, ad impressions, the price per ad, and cost management will also be closely monitored. Meta reported a 10% year-over-year increase in both ad impressions and average price per ad in the second quarter.
Overall, Meta’s third-quarter earnings report will offer valuable insights into the company’s strategies for leveraging AI, competing with Google in the search market, and navigating the evolving online advertising landscape. The report has the potential to shape the future of Meta and its role in the tech industry.
