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Speaker 1: Bloomberg Audio Studios, podcasts, radio News.

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Speaker 2: The Stock Movers Report, your roundup of companies making moves

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Speaker 2: in the stock market, harnessing the power of Bloomberg Data.

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Speaker 3: We're sitting here with normal Linda. I'm Paul screen you.

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Speaker 3: Let's take a look at some of the stocks on

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Speaker 3: the move. Meta big big earnings numbers. Let's check in

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Speaker 3: with Kurt Wagner, tech reporter for Bloomberg News. Kurt talked

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Speaker 3: to us about Meta here. Some people feel like Meta

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Speaker 3: might be a little late to the AI party. I

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Speaker 3: don't think that, would you take away.

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Speaker 1: I don't think they're late at all. I don't think

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Speaker 1: that they have offered some of the same products that

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Speaker 1: some of their rivals like open ai and Topic have

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Speaker 1: At Google, so they have been building AI models for

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Speaker 1: you know, basically a decade. They mostly kept them in house.

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Speaker 1: They use them, you know, in this case, they've been

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Speaker 1: talking a lot about how they're using them to improve

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Speaker 1: their own ad targeting and their own content recommend and

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Speaker 1: so while they're not out selling access to their models

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Speaker 1: and the way that rivals are, they're still building them.

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Speaker 1: And you know, clearly the street's very happy with what's happening. Here,

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Speaker 1: which is that their ads business, which is powered by

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Speaker 1: Instagram and Facebook, is just a cash printing machine, and

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Speaker 1: they are taking all the profits from that and they're

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Speaker 1: you know, funneling them into AI. And yesterday we saw

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Speaker 1: that the ads business is doing better than expected and

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Speaker 1: they're spending even more on AI and that is a

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Speaker 1: combination that people seem very happy with right now.

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Speaker 4: Well, Kurt, even if there are people saying that Meta

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Speaker 4: is late to the AI party, if you look at

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Speaker 4: chairs year to date and you compare it against the

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Speaker 4: others in the mag seven, we are seeing it as

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Speaker 4: the best performing stock, the second best performing stock, right

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Speaker 4: behind Nvidio. What do you think is really propelled it

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Speaker 4: forward to that magnitude here?

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Speaker 1: Well, I think there's a couple of things. One, there's

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Speaker 1: the Mark Zuckerberg factor of this. You can love him,

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Speaker 1: you can hate him. But Mark Zuckerberg has a pretty

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Speaker 1: strong history of you know, quite frankly, reaching the largest

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Speaker 1: audience with his products. That is something he's done repeatedly

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Speaker 1: throughout metas history. And he has sole control of this company.

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Speaker 1: So if you are a believer in him, you are

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Speaker 1: a believer in Meta right now. And I think that's

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Speaker 1: one factor. And then I think the other is you

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Speaker 1: know that reach matters a lot when you're talking about AI,

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Speaker 1: because when you build in this case, Meta AI is

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Speaker 1: the name of their chatbot. They have put it into Facebook, Instagram, WhatsApp,

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Speaker 1: it already has a billion monthly users simply because they

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Speaker 1: have that existing audience. So where a lot of companies

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Speaker 1: are building these AI products and then trying to find

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Speaker 1: the audience for them, Meta already has the audience. So

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Speaker 1: when they figure this out, when they, you know, if

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Speaker 1: they're ray Ban Glasses for example, take off in the

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Speaker 1: way that they hope they will, they have the built

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Speaker 1: in online audience already for these tools, and I think

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Speaker 1: that that's something that a lot of people are optimistic about.

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Speaker 3: Kert, you mentioned WhatsApp wall. I think I was covered

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Speaker 3: in stock when they bought WhatsApp seven eight years ago.

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Speaker 3: Are they finally starting to monetize WhatsApp and if so,

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Speaker 3: how are they doing it?

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Speaker 1: They are starting to monetize What's up? They announced in

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Speaker 1: June that they're going to start running ads and WhatsApp

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Speaker 1: for the first time. If you're a history buff in

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Speaker 1: terms of following Facebook history, you'll know that that's been

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Speaker 1: a long time coming, and there's been a lot of

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Speaker 1: bumps and bruises along the way and get in there.

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Speaker 1: But I will say the CFO, Susan Le she did

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Speaker 1: warn that even though they are putting ads into WhatsApp,

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Speaker 1: this is a long road. It is not going to

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Speaker 1: be a material impact for the business in terms of

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Speaker 1: revenue or ad impressions for the next few years. They're

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Speaker 1: going to start slow. I think that makes sense for

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Speaker 1: a couple of reasons. The first being that WhatsApp is

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Speaker 1: popular in a lot of regions that aren't necessarily lucrative

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Speaker 1: in terms of advertising, you know, India, Brazil, places like that.

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Speaker 1: And then second, you're kind of trying to convince advertisers

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Speaker 1: to shift budget perhaps from more lucrative things like Instagram

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Speaker 1: or Facebook, and so I think it's going to be

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Speaker 1: slow for people to maybe move over their money towards WhatsApp.

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Speaker 1: But again, fast forward a few years from now, I

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Speaker 1: think there's obviously potential here. That app has a multiple

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Speaker 1: billions of users globally.

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Speaker 4: Kurt, it's hard to be a bear here on this stock.

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Speaker 4: I'm looking at Wall Street ratings right now, seventy four

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Speaker 4: people have a buy. We have five holds on the

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Speaker 4: stock and then one sell and that's coming from BNP Paaraba.

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Speaker 4: But if you really had to dig in and see

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Speaker 4: what the overhangs could potentially be here for this company,

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Speaker 4: what would you say or some areas that investors are

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Speaker 4: looking to see a bit more of a push forward.

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Speaker 1: Well, I do think the spending is a lot and

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Speaker 1: so while the ads business continues to chug along, people

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Speaker 1: are going to say, Okay, that's fine. If there is

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Speaker 1: a stumble in this ads business, you know, heading into

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Speaker 1: the holiday quarter or something like that, suddenly people might

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Speaker 1: start wondering why are they spending so much if the

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Speaker 1: ads business isn't delivering. So that's one. The other is

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Speaker 1: their reality labs division, that's the quest VR headsets, things

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Speaker 1: like that. That is a loss leader. I believe four

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Speaker 1: point five billion dollars in losses just last quarter alone.

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Speaker 1: They also mentioned on the call that why sales were

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Speaker 1: down year over years, So that's a concern I would

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Speaker 1: imagine for some people.

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