AI is the dominant storyline — make that only storyline — as two of Big Tech’s biggest players prepare to announce quarterly results next week. While Alphabet Inc.’s
Google reportedly races to develop a new search engine powered by AI, Meta Platforms Inc.
is changing its sales pitch to advertisers from a focus on the metaverse to artificial intelligence to drum up short-term revenue. Meta is expected to make an announcement around its plans next month.
With advertising sales — their primary source of revenue — in a funk, both companies are scrambling to shore up sales through the promise of AI. “Brace for a long ad winter” that “may well persist” until the second half of 2023, Evercore ISI analyst Mark Mahaney said in a note last week. Meta’s annual advertising revenue is expected to reach $51.35 billion in 2023, up 2.7% from $50 billion from 2022. It is forecast to grow 8% to $55.5 billion in 2024, according to market researcher Insider Intelligence. Facebook’s parent company is expected to announce its latest round of layoffs on Wednesday. Google, by comparison, is expected to haul in $71.5 billion in 2023, up 2.9% from $69.5 billion in 2022. Ad sales are expected to increase 6.2% to $75.92 billion in 2024. Like Meta, Google is rumored to be planning more layoffs soon. “AI is the hot thing. And Meta is playing down the metaverse [which inspired its corporate name change] for now in favor of AI with advertisers,” Evelyn Mitchell, senior analyst at Insider Intelligence, told MarketWatch. “It is a solid strategy during an unprecedented year of economic uncertainty after years of astronomical growth in tech.” Against a slowdown in ad sales, tech executives have incessantly hyped the promise of AI this y …
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