{"id":267264,"date":"2025-11-02T17:25:07","date_gmt":"2025-11-02T17:25:07","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/267264\/"},"modified":"2025-11-02T17:25:07","modified_gmt":"2025-11-02T17:25:07","slug":"meta-has-an-ai-product-problem","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/267264\/","title":{"rendered":"Meta has an AI product problem\u00a0"},"content":{"rendered":"

In the midst of an unprecedented AI buildout<\/a>, Meta is spending more than most. The company is building two massive data centers, and reporting indicates<\/a> there will be as much as $600 billion in spending on U.S. infrastructure over the next three years. \u00a0<\/p>\n

Those figures might not raise eyebrows in Silicon Valley, but they\u2019re starting to make Wall Street nervous.\u00a0<\/p>\n

The issue came to a head this week as Meta reported quarterly earnings<\/a>, which showed the company\u2019s operating expenses jumping $7 billion year-over-year and nearly $20 billion in capital expense. It was the result of intense spending on AI talent and infrastructure, which has yet to bring in meaningful revenue for the company. When analysts pressed for more specifics<\/a>, Mark Zuckerberg made it clear the spending was just getting started.\u00a0<\/p>\n

\u201cThe right thing to do is to try to accelerate this to make sure that we have the compute that we need, both for the AI research and new things that we\u2019re doing, and to try to get to a different state on our compute stance on the core business,\u201d Zuckerberg told analysts on the call. \u201cOur view is that when we get the new models that we\u2019re building in MSL in there and get like truly frontier models with novel capabilities that you don\u2019t have in other places, then I think that this is just a massive latent opportunity.\u201d\u00a0<\/p>\n

If his goal was to reassure investors, it didn\u2019t work. By the end of the call, Meta\u2019s share price had\u00a0plummeted in value. Two days later, the rout has only deepened. The Meta\u2019s stock dropped 12% by the closing bell on Friday,\u00a0representing more than $200 billion in lost market cap.\u00a0<\/p>\n

It\u2019s dangerous to read too much into stock prices, and in strict financial terms, Meta\u2019s quarterly earnings weren\u2019t that bad. ($20 billion in quarterly profit is nothing to complain about.) But this was the first quarter in which Meta\u2019s aggressive AI spending on both talent and infrastructure had a visible impact on the company\u2019s bottom line. Even more alarming was that, aside from a lot of enormous data centers and well-compensated AI researchers, it wasn\u2019t clear what the money actually bought.\u00a0\u00a0<\/p>\n

Analysts pressed Zuckerberg on why he was spending so much on AI, and when they could expect to see revenue from the growing spending. But the call came at an odd spot in Meta\u2019s planning, with no clear budget for projected spending and no available product that could anchor a revenue forecast. As a result, Zuckerberg was left with only general claims about the promise of AI.\u00a0\u00a0<\/p>\n

Techcrunch event<\/p>\n

\n\t\t\t\t\t\t\t\t\tSan Francisco
\n\t\t\t\t\t\t\t\t\t\t\t\t\t|
\n\t\t\t\t\t\t\t\t\t\t\t\t\tOctober 13-15, 2026\n\t\t\t\t\t\t\t<\/p>\n

\u201cThere are going to be all kinds of new products around different content formats, and we\u2019re starting to see that,\u201d he asid during the call. \u201cAnd then there are the business versions of all these too, like business A \u2026 the other part is how more intelligent models are just going to improve the core business and improve the recommendations that we make across the Family of Apps and improve the recommendations in advertising.\u201d\u00a0<\/p>\n

Meta isn\u2019t the only company spending billions of dollars on AI infrastructure, so it\u2019s worth teasing out why this same spending isn\u2019t spooking investors at Google or Nvidia, both of which\u00a0had a great quarter. OpenAI is the biggest offender, spending the same amount with far less financial cushion than Meta. \u00a0<\/p>\n

There really are concerns that we\u2019re creating a bubble, and if we are, Meta\u2019s core business will let it ride things out better than most.\u00a0<\/p>\n

But if you ask Sam Altman why he\u2019s spending hundreds of billions of dollars on compute, he\u2019ll tell you he\u2019s operating one of the fastest growing consumer services in human history \u2014 and one\u00a0bringing in $20 billion a year in revenue. We can argue about how sustainable the growth rate is (that\u2019s a separate blog post), but there really is a fast-growing product at the bottom of all the OpenAI hype. A fast-growing ARR figure goes a long way to answer questions.\u00a0<\/p>\n

Meta doesn\u2019t have a product like that, and it\u2019s not clear where it\u2019s going to come from. \u00a0<\/p>\n

The company\u2019s most powerful AI product is the Meta AI assistant, which Zuckerberg noted on the call has more than a billion active users. But those numbers are surely juiced by the three billion active users on Facebook and Instagram, and it\u2019s hard to see the current version of Meta AI as a competitor to ChatGPT. There\u2019s also the Vibes video generator, which really did boost daily active users<\/a>, but has limited business impact beyond that. \u00a0<\/p>\n

The most ambitious project is the Vanguard smart glasses<\/a> released earlier this month. However, the glasses feel more like an extension of Meta\u2019s Reality Labs work than a real attempt to harness the power of LLMs. \u00a0<\/p>\n

Put simply, these are promising experiments, not fully formed products.\u00a0<\/p>\n

It\u2019s telling then that when he was pressed on infrastructure spending, Zuckerberg\u2019s response wasn\u2019t to point to the recent launches, but to focus on the next generation.\u00a0<\/p>\n

Zuckerberg stressed, while emphasizing the pending impact of the Superintelligence Lab\u2019s new models,\u00a0that he was very excited about new products. \u00a0<\/p>\n

\u201cIt\u2019s not just Meta AI as an assistant,\u201d he said. \u201cWe expect to build novel models and novel products, and I\u2019m excited to share more when we have it.\u201d \u00a0<\/p>\n

But this was an earnings call, not a product launch, so all he could say was that there would be more to share \u201cin the coming months.\u201d\u00a0<\/p>\n

As the market response showed that answer is wearing thin. \u00a0<\/p>\n

To be fair, it\u2019s only been four months since Zuckerberg restructured his company\u2019s AI team, and the new Superintelligence team hasn\u2019t had time to launch an earthshaking AI product yet. But as the company spends billions of dollars to stay competitive in AI, there\u2019s still no clear indication of what role Zuckerberg wants to play in the new industry. \u00a0<\/p>\n

Will Meta AI use the company\u2019s detailed store of personal data to grow into a ChatGPT competitor? Is Vibes the first step in a consumer entertainment play, building off Meta\u2019s targeted ad system? Or maybe Zuckerberg\u2019s references to \u201cbusiness AI\u201d are hints at a more detailed enterprise play?\u00a0<\/p>\n

So far, it\u2019s anyone\u2019s guess. Whatever the answer, the pressure is on Meta to find it \u2014 and soon.\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"In the midst of an unprecedented AI buildout, Meta is spending more than most. The company is building…\n","protected":false},"author":2,"featured_media":267265,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[45],"tags":[182,181,507,12424,1282,74],"class_list":{"0":"post-267264","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-artificial-intelligence","10":"tag-artificialintelligence","11":"tag-mark-zuckerberg","12":"tag-meta","13":"tag-technology"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/267264","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=267264"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/267264\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/267265"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=267264"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=267264"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=267264"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}