Kurt Wagner

The stock went down 14%.

Everyone was very concerned with this added spending.

And yet today, when the numbers come out and they're higher than estimates, estimates is presumably built in that commentary from last quarter.

It doesn't seem to be as much of a problem.

My guess is that they are seeing

You know, this Q1 revenue, for example, which is going to come in two, three, four billion dollars higher than expected.

They're just seeing this ads business that is completely churning money out.

And so if you feel that you have the money coming in, maybe you stomach those higher numbers than you would have expected.

Yeah.

Yeah, I mean, my guess is that we're going to jump on this earnings call here in a minute or two, and you're going to hear the company talk a lot about how AI is impacting the ads business, because that's what they need to do to sell this right now, right?

It's hard to say.

It is in part because you see that rise in average cost per ad.

That's because people are getting more granular, more targeted.

They're spending less to create some of this ad copy because AI can do it for them.

There's a bunch of ways that AI can truly improve the ads business.

It's not as sexy, right?

It's not as obvious maybe because a lot of it's happening incrementally behind the scenes.

That is a story and a narrative that this company needs to sell because if you're just simply saying, trust us, we're building a $50 billion data center in Louisiana, and you'll see the returns of that in seven years, that's a hard pitch.

But if you say, hey, look, check it out, the ads business is growing quarter after quarter because of these ad improvements, these AI improvements we're making, that's the narrative that they're going to want to sell to people today.

yes so this is an annual thing right looking ahead to 2026 budgets uh in this case mark zuckerberg has a nice home in hawaii where they have a series of meetings executives come in in the month of november and to your point they talk about this year 10 cuts sort of across the board looking at uh all the different teams but that the metaverse has been asked to cut much more deeply than that