Shares of Meta Platforms rallied on Thursday, rising above 500 once again as the Facebook parent highlighted its success in using generative artificial intelligence to boost engagement.
The company provided new details on how it will use powerful generative AI models to recommend videos across Facebook's ecosystem.
Facebook head Tom Alison presented details of the plan during a Morgan Stanley industry conference. Meta saw positive results when it recently shifted to using large language models to improve the algorithms that recommend Reels videos to Facebook users, he said.
The test began late last year. Using the same data with a "new model architecture" to recommend videos to users, Alison said Meta saw an 8%-10% gain in watch time for Reels on Facebook.
"What that told us was this new model architecture is learning from the data much more efficiently than the previous generation," Alison said.
Scaling that model up to the rest of Facebook is part of the company's "technology roadmap" through 2026, Alison added.
"If we get this right, not only will the recommendations be kind of more engaging and more relevant, but we think the responsiveness of them can improve as well," he said. "So if you see something that you're into in Reels and then you go back to (the Facebook) Feed, we can show you more similar content in Feed as well, very seamlessly and responsively."
Meta's Open-Source AI Approach
On the stock market today, Meta stock gained 3.3% to close at 512.30. Shares gained 1.2% Wednesday.
Meta's shares have surged nearly 180% in the past 12 months. Those gains are helped by Meta's perception as a likely AI winner. The company is spending billions on computing chips from Nvidia and others to power its AI ambitions. Last year it launched a powerful large language model called Llama. But Meta Chief Executive Mark Zuckerberg is a proponent of an open-source approach to AI. That means that the tech giant's LLM is available free to developers and researchers.
Zuckerberg has previously told analysts that the AI investment can pay off through stronger engagement with Meta's apps.
"Whenever there's more engagement in the apps, that creates the opportunity for more monetization," Zuckerberg said on the company's October earnings call. Meta generates nearly all its revenue by selling ads on its social media platforms.
Alison's comments align with what Zuckerberg told analysts during the company's fourth-quarter earnings call in February.
"The biggest opportunity going forward is unifying our recommendation systems across Reels and other types of video," Zuckerberg said. "That will help people discover the best content across our systems, no matter what format it's in."
Meta Stock: New Era Of Social Media User
Further, Alison said Wednesday that Meta's AI progress can help it stay relevant to a new generation.
"The next generation that we're looking at, Gen Z – U.S. young adults ages 18 to 29 – they expect different things from social media today," Alison said. "They want to stay up to date with their friends and with the people that they care about. But they also view social media as something that's really going to open up their world and help them pursue their interests, and they want to see content from everywhere."
In other Meta stock news, the Wall Street Journal reported Thursday that e-commerce platform Temu spent nearly $2 billion last year advertising through Meta. Temu was launched in 2022 by China-based PDD Holdings. It is among a group China-based retailers that have spent big on advertising through Facebook and Instagram to reach U.S. shoppers.
