Shares of Meta Platforms (META) saw a significant increase on Thursday, crossing the 500 threshold once more as the parent company of Facebook highlighted its effective use of generative artificial intelligence to improve user engagement. By midday, Meta’s stock had climbed by 3.5% to around 513.50.
At a Morgan Stanley industry conference, Meta disclosed its strategy of harnessing robust generative AI models to suggest videos across the Facebook ecosystem. Tom Alison, the head of Facebook, shared details of the strategy, emphasizing the positive results seen after shifting to large language models to enhance the algorithms recommending Reels videos to Facebook users.
The initial trial, which began late last year utilizing a “new model architecture” for video recommendations, led to an 8%-10% increase in watch time for Reels on Facebook, showcasing more effective data learning compared to the previous iteration, according to Alison. This successful model implementation is set to be expanded across Facebook as part of the company’s technology roadmap through 2026.
Alison expressed confidence in the improved engagement and relevance of recommendations, foreseeing a boost in responsiveness as well. The objective is to seamlessly provide users with more relevant content based on their preferences across different sections of the platform.
Meta’s dedication to an open-source AI strategy is highlighted by its significant investments in computing chips from Nvidia (NVDA) and other collaborators to strengthen its AI initiatives. Mark Zuckerberg, the CEO of Meta, advocates for democratizing AI by making the company’s large language model, Llama, accessible to developers and researchers.
Zuckerberg is convinced that investing in AI will drive higher engagement with Meta’s apps, leading to enhanced monetization opportunities through ad sales, which currently form the bulk of the company’s revenue.
In line with Zuckerberg’s vision, Alison stressed the importance of consolidating recommendation systems to optimize content discovery across different video formats on Meta’s platforms.
Furthermore, Meta’s progress in AI is poised to meet the changing preferences of the younger demographic, especially Gen Z, who are looking for social media platforms that not only connect them with friends but also offer avenues to explore diverse content tailored to their interests.
In a related development, the Wall Street Journal reported that e-commerce platform Temu, supported by China-based PDD Holdings (PDD), allocated nearly $2 billion towards advertising on Meta last year. This move reflects the significant investments made by Chinese retailers to leverage Facebook and Instagram ads to target U.S. consumers.
