Meta Platforms (META) CEO Mark Zuckerberg addressed the pressing issues of massive AI (artificial intelligence) expenditure and DeepSeek’s AI model during the Q4 earnings call yesterday. Meta reported better-than-expected Q4 FY24 results, pushing its shares up in extended trading. The CEO also noted that Meta is ready to spend a total of $114 to $119 billion in total expenses, including $60 to $65 billion in AI spend this year. The CEO tried to pacify jittery investors by stating that it was too early to understand the full repercussions of DeepSeek’s cheaper R1 model.
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Why Zuckerberg Is Not Afraid of DeepSeek
Zuckerberg added that it is not yet the time to reduce spending on AI infrastructure and GPUs (graphic processing units). In fact, he believes that the ongoing huge investments will return favorably in the long run, placing Meta in an advantageous spot in the AI realm. He contended that although China’s DeepSeek has been able to train and develop its AI model with such low costs and computing, higher server power and compute may be necessary to run the software with “a higher level of intelligence and a higher quality of service.”
While DeepSeek is in the training phase, most American AI models have shifted to the processing, inferencing, and reasoning stages, which require high compute. Having said that, Zuckerberg also noted that he is impressed with what DeepSeek has achieved, and Meta could implement some of these innovations in its own AI models.
Meta’s AI Models Are Progressing Rapidly
Meta said it had 3.35 billion daily active users in the fourth quarter of 2024, putting into perspective the huge amount of power required to serve its customer base. Furthermore, Zuckerberg said that all tech companies constantly strive to learn from others, and DeepSeek is no exception. He said that DeepSeek’s technology will enable Meta to release its own open-source free Llama AI models.
Meanwhile, Meta is progressing well to launch its Llama 4 AI model, which will boast multimodal and agentic capabilities. The company expects its AI assistant, which it views as one of the most transformative products yet, will reach nearly 1 billion users this year. In Q4, Meta’s revenues rose 21% year-over-year while net profit jumped 43%. The company does not see any meaningful impact from Meta’s content policy changes on ad spending.
Zuckerberg concluded that the fact that DeepSeek became such a big hit in such a short span only justifies Meta’s commitment to having an open-source AI model. Zuckerberg believes that 2025 will prove to be a year of setting a global open-source standard, and he hopes that it will be led by America.
Are META Shares a Good Buy?
Analysts remain highly bullish about Meta stock. On TipRanks, META stock commands a Strong Buy consensus rating based on 40 Buys, three Holds, and one Sell rating. Also, the average Meta Platforms stock price target of $695.44 implies 2.8% upside potential from current levels. In the past year, META shares have gained 69.7%.
