Meta Reports $17.1B R&D Spending in Q4 Focused on AI
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2h ago
0mins
Source: seekingalpha
- Surge in R&D Spending: Meta's Q4 2023 R&D expenditure reached $17.1 billion, marking a nearly 41% increase from the previous year, demonstrating the company's strong commitment to AI projects and solidifying its leadership in technological innovation.
- Revenue to Spending Ratio: In Q4, Meta reported total revenue of $59.9 billion and net income of $22.8 billion, with R&D expenses accounting for 28.5% of total revenue, a significant increase from 20.9% in Q4 2021, indicating a heightened focus on AI.
- Strategic Shift: Over the past year, Meta has gradually shifted its focus from the metaverse to AI, announcing major cuts to its Reality Labs, which indicates a fundamental change in its strategic direction despite its previous emphasis on the metaverse in 2021.
- Historical Comparison: Compared to the $7.05 billion spent on R&D in Q4 2021, Meta's current spending has nearly doubled, reflecting a significant enhancement in resource allocation and market adaptability in the technology sector.
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Analyst Views on META
Wall Street analysts forecast META stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for META is 824.71 USD with a low forecast of 655.15 USD and a high forecast of 1117 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
44 Analyst Rating
37 Buy
6 Hold
1 Sell
Strong Buy
Current: 738.310
Low
655.15
Averages
824.71
High
1117
Current: 738.310
Low
655.15
Averages
824.71
High
1117
About META
Meta Platforms, Inc. is building human connections, powered by artificial intelligence and immersive technologies. The Company's products enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality (VR) and mixed reality (MR) headsets, augmented reality (AR), and wearables. It also helps people discover and learn about what is going on in the world around them, enabling people to share their experiences, ideas, photos, videos, and other content with audiences ranging from their closest family members and friends to the public at large. The Company's segments include Family of Apps (FoA) and Reality Labs (RL). FoA segment includes Facebook, Instagram, Messenger, WhatsApp and Threads. RL segment includes its virtual, augmented, and mixed reality related consumer hardware, software and content. Its product offerings in VR include its Meta Quest devices, as well as software and content available through the Meta Horizon Store.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Meta Reports $17.1B R&D Spending in Q4 Focused on AI
- Surge in R&D Spending: Meta's Q4 2023 R&D expenditure reached $17.1 billion, marking a nearly 41% increase from the previous year, demonstrating the company's strong commitment to AI projects and solidifying its leadership in technological innovation.
- Revenue to Spending Ratio: In Q4, Meta reported total revenue of $59.9 billion and net income of $22.8 billion, with R&D expenses accounting for 28.5% of total revenue, a significant increase from 20.9% in Q4 2021, indicating a heightened focus on AI.
- Strategic Shift: Over the past year, Meta has gradually shifted its focus from the metaverse to AI, announcing major cuts to its Reality Labs, which indicates a fundamental change in its strategic direction despite its previous emphasis on the metaverse in 2021.
- Historical Comparison: Compared to the $7.05 billion spent on R&D in Q4 2021, Meta's current spending has nearly doubled, reflecting a significant enhancement in resource allocation and market adaptability in the technology sector.
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Meta's Digital Advertising Business Thrives
- Significant User Growth: Meta's family of apps saw a 7% year-over-year increase in daily active users, reaching 3.58 billion, demonstrating the strong appeal of its social media platforms and further solidifying its market leadership.
- Advertising Revenue Boost: Despite an 18% increase in ad impressions in Q4, Meta successfully raised the average price per ad by 6%, indicating an enhancement in the value it delivers to advertisers and boosting their investment confidence.
- Strong Financial Performance: Meta's total revenue jumped 24% to $60 billion, surpassing Wall Street's expectations for earnings per share of $8.22, with actual EPS at $8.88, reflecting the company's profitability amid heavy investment.
- Future Investment Plans: Meta plans to increase capital expenditures to between $115 billion and $135 billion in 2026, primarily for AI-related cloud computing and infrastructure, demonstrating its strong commitment to future technological advancements.
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