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Instant Reaction: Meta Reports Earnings · Bloomberg Intelligence

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  Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business
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  Speaker 1: Week inside from the reporters and editors who bring you
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  Speaker 1: America's most trusted business magazine, plus global business, finance and
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  Speaker 1: tech news as it happens. Bloomberg Business Week with Carol
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  Speaker 1: Messer and Tim Stenebek on Bloomberg Radio.
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  Speaker 2: It is Bloomberg Business Week. Shares some meta platforms bouncing around,
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  Speaker 2: but up about five percent in the after hours. Now,
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  Speaker 2: the company did report second quarter revenue that beat estimates.
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  Speaker 2: Revenue coming in at thirty nine point oh seven billion dollars.
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  Speaker 2: That's a twenty two percent year over year increase, beating
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  Speaker 2: estimates of thirty eight point three four billion dollars in
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  Speaker 2: that family of apps revenue that is the core business
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  Speaker 2: thirty eight point seven two billion dollars in the quarter,
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  Speaker 2: up twenty two percent. Estimate was for thirty seven point
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  Speaker 2: seven six Carol highlighted the capex, the company seeing total
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  Speaker 2: capex thirty seven to forty billion where they sought where
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  Speaker 2: investors saw thirty five to forty billion. The estimate was
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  Speaker 2: for thirty seven point five to three billion dollars. So again,
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  Speaker 2: what we saw from Microsoft and what we saw from Alphabet.
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  Speaker 3: Here's what I'm going to say. Their bread and butter
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  Speaker 3: is advertising. They did report better than a sales for
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  Speaker 3: the second quarter, So again, are right through the Wagner
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  Speaker 3: Carol offering evidence at the company's heavy investments in AI
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  Speaker 3: helping itself more targeted and personal personalized advertisements. That is
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  Speaker 3: still their bread and butter. So if they are saying
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  Speaker 3: we are spending guys, and we're going to spend even more,
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  Speaker 3: but look at the results from the past quarter. And
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  Speaker 3: that's where I'm trying to make sense of the stock
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  Speaker 3: being up here in the aftermarket, up five percent. It's
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  Speaker 3: not like people are saying, oh my god, what are
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  Speaker 3: you spending?
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  Speaker 2: You all thought you all thought that AI was going
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  Speaker 2: to make our jobs easier, when in reality it just
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  Speaker 2: makes Facebook better at targeting ads to you.
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  Speaker 3: Yeah, yeah, well done. All right, So let's get to it.
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  Speaker 3: Our team coverage with Bloomberg News contributor John Earlekman joining
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  Speaker 3: us from Toronto, along with Bloomberg News social media reporter
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  Speaker 3: Asha Counts joining Usgosh, I want to start with you,
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  Speaker 3: how did meta do?
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  Speaker 4: I mean? I think you said it earlier. They beat
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  Speaker 4: on everything right, The revenue beat expectations actually the top
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  Speaker 4: end of what analysts expected. And they also beat on
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  Speaker 4: the amount of users that they have. I mean, they
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  Speaker 4: just they beat in every dimension. Now, the one thing
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  Speaker 4: you did mention right with that capex, which is that
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  Speaker 4: spending a lot of which is going to things like
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  Speaker 4: a infrastructure. You're talking servers and data and hardware and
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  Speaker 4: stuff like that. That increased a little bit. But because
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  Speaker 4: it was that bottom range, right, like, their top line
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  Speaker 4: level didn't increase. I don't think investors are going to
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  Speaker 4: be that upset about that. So, yeah, they beat on everything,
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  Speaker 4: changed a couple of things, but I think overall it's
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  Speaker 4: good for them.
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  Speaker 2: Hey, John, what sticks out to you here? You've had
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  Speaker 2: a few minutes to go over these numbers. What sticks
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  Speaker 2: out to you?
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  Speaker 5: Just tim that Mark Zuckerberg and Metas seem to have
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  Speaker 5: the script down.
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  Speaker 6: Pretty cold at this point.
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  Speaker 5: I mean, building on everything you've said, here's a company
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  Speaker 5: that over the last couple of years, has learned its
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  Speaker 5: lessons when it comes to what starts to make Wall
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  Speaker 5: Street uncomfortable on the spending front. And I think that
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  Speaker 5: the fact that the as you guys highlighted earlier, that
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  Speaker 5: they can make the case that the revenue that came
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  Speaker 5: in stronger than expected gets assistance from the investment that's
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  Speaker 5: coming from all this AI focus.
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  Speaker 6: That seems to be a helping hand here.
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  Speaker 5: I would add though, that if you go back to
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  Speaker 5: the last quarter, remember and by the way, this stock
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  Speaker 5: always moves a lot. Generally, it moves a lot after earnings,
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  Speaker 5: either up or down. But the shares got crushed because
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  Speaker 5: investors had to do another reassessment on this AI spending.
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  Speaker 5: So arguably we've had some time to fit with this
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  Speaker 5: and even the stock price. I know it's up a
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  Speaker 5: lot this year, but at last check it was coming
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  Speaker 5: into this earnings.
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  Speaker 6: Report a little bit lower than where it.
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  Speaker 5: Was heading into the last quarter. So I don't think
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  Speaker 5: anyone would have been surprised to see a big spending bill.
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  Speaker 5: But you have stronger than expect did numbers. And remember
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  Speaker 5: this is also the company that's starting to find shareholder
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  Speaker 5: friendly tricks and it's playbook. They issued their first dividend
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  Speaker 5: and they're buying back a lot of stocks, so they've
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  Speaker 5: got the levers they can pull. But we still have
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  Speaker 5: to see how all this AI spending nets out in
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  Speaker 5: the long term. We don't quite know, but they're trying
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  Speaker 5: to paint a good picture so far.
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  Speaker 3: Yeah, and for a stock that bopped up I think
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  Speaker 3: about ten percent here in the aftermarket, we're now just
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  Speaker 3: up about three point six percent, still higher, but it
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  Speaker 3: continues as I think investors and analysts continue to go
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  Speaker 3: through the report and we'll wait to see what comes
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  Speaker 3: out on the call. Having said that, John, how does
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  Speaker 3: Meta square with some of the other companies that we
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  Speaker 3: are so intently focused on their AI spending and their
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  Speaker 3: AI ROI return on investment?
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  Speaker 5: You know, everybody is in an arms race here, and
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  Speaker 5: I think at the end of the day, Carol, you
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  Speaker 5: could make an argument that because Alphabet came first and
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  Speaker 5: investors got a little jittery on the roadmap for the
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  Speaker 5: spending on AI and the return on investment. Remember that
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  Speaker 5: to coming into this week, tech had been pretty roughed up,
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  Speaker 5: So it almost dare I say, set the bar lower
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  Speaker 5: for the tech giants that would be putting out numbers
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  Speaker 5: this week. I think that at the end of the day,
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  Speaker 5: longer term, and Mark Zuckerberg said it himself in his
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  Speaker 5: interview with Emily Chang not that long ago, there is
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  Speaker 5: a possibility that all the spending they are doing today
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  Speaker 5: might be an overshoot, but they're right now trying to
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  Speaker 5: build a future where engagement can be increased through AI,
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  Speaker 5: that advertisers can have better, more targeted ads through AI,
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  Speaker 5: that they can have a much cleaner thread between software
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  Speaker 5: and hardware, like the glasses you're talking about.
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  Speaker 6: I think they really like where this story is going.
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  Speaker 5: Over the long term, they're probably getting a boost as well,
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  Speaker 5: just because there's a lot of eyeballs on big events
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  Speaker 5: right now like the Olympics, and so they can benefit
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  Speaker 5: from that.
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  Speaker 6: But there's the other side of that we don't know
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  Speaker 6: a lot about.
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  Speaker 5: Mark Zuckerbergs spent a lot of time in front of
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  Speaker 5: lawmakers in Washington over.
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  Speaker 6: The last decade.
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  Speaker 5: People are still a little concerned, maybe more than a
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  Speaker 5: little concerned about the ramifications of all this AI technology
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  Speaker 5: that they're weaving into the Meta ecosystem. But you know,
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  Speaker 5: at the end of the day, if they can keep
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  Speaker 5: the bottom line in a relatively clean manner and keep
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  Speaker 5: growing the revenue story, you know, Meta is in a
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  Speaker 5: position to have a arguably a cleaner quarterly story than
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  Speaker 5: some of its peers.
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  Speaker 2: Hey, so can you talk a little bit about the
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  Speaker 2: integration of LAMA and AI into meta platforms family of apps.
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  Speaker 2: You know, Carol and I were joking about the idea
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  Speaker 2: of the result of all this investment in AI is
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  Speaker 2: just better targeted ads.
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  Speaker 4: It's funny because Metta is one of those companies where
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  Speaker 4: the AI is all behind the scenes, right. So obviously
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  Speaker 4: they've been using AI for years, per decades to recommend
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  Speaker 4: content on your feed, whether that's on Instagram or Facebook,
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  Speaker 4: whether that's posts and images or videos, and so a
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  Speaker 4: lot of it goes towards that. But then they've also
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  Speaker 4: released new products like AI chatbot that you could talk to, right,
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  Speaker 4: So meta AI, if you go on Instagram or Facebook,
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  Speaker 4: it'll pop up and you can ask it questions and
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  Speaker 4: things like that, so you see some product experiences. They
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  Speaker 4: also had rolled out some things like celebrity chatbots, so
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  Speaker 4: you could chat with a chatbot that looked and sounded like,
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  Speaker 4: you know, Tom Brady, for example.
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  Speaker 2: I knew you were gonna say Tom Brady, Yeah, I
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  Speaker 2: remember he showed that off.
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  Speaker 4: Right, Yes, yeah, they showed that off. But then they
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  Speaker 4: shuddered it recently, and so it's like, how much are
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  Speaker 4: those products and services really moving the needle for them
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  Speaker 4: or is it really just again like you're saying, going
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  Speaker 4: back to the core advertising business, going back to the feed,
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  Speaker 4: and how do they recommend content that users actually want
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  Speaker 4: to watch the view?
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  Speaker 3: Can I help me out here? Is there something in
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  Speaker 3: this release that sells specifically shows specifically is there a
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  Speaker 3: number or something that says, Yep, here's our AI investing
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  Speaker 3: and here's how it paid off? I mean, or John,
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  Speaker 3: do we just assume that if the revenue is beating
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  Speaker 3: that it's because of AI spending? You know what I mean?
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  Speaker 6: Yeah, I absolutely know what you mean.
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  Speaker 5: I mean, the first line in the press release itself
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  Speaker 5: was really trying to talk more about how AI is
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  Speaker 5: complementing the hardware that they've got.
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  Speaker 6: Yeah, and that might just speak to the fact that
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  Speaker 6: go back a couple of years.
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  Speaker 5: Ago, as we were just highlighting like AI is technically
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  Speaker 5: not a new thing for the company, but it is
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  Speaker 5: the hot thing for the world to talk about. So
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  Speaker 5: it is front and center right now. But a couple
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  Speaker 5: of years ago what was front and center was quite
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  Speaker 5: literally changing the name from Facebook to Meta and talking
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  Speaker 5: about the metaverse and talking about you know, other VR
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  Speaker 5: and AR opportunities. And so I think that there is
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  Speaker 5: still because of the explosive spending in that area. You know,
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  Speaker 5: maybe this is Mark Zuckerberg just wanted to put a
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  Speaker 5: pin in the fact that they can actually make all
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  Speaker 5: of this thing together. I would imagine, Carol, you get
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  Speaker 5: more color on how they're connecting the advertising dots on
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  Speaker 5: the quarterly conference call. But the revenue growing. I think
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  Speaker 5: already analysts, in reaction to this as Bloomberg is reporting,
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  Speaker 5: are suggesting that as the case.
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  Speaker 3: Listen, both of you. Thank you so much. Bloomberg News
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  Speaker 3: contributor John Arlokman out there in Toronto. Bloomberg News social
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  Speaker 3: media reporter Asha Counts in Chicago shares a mediciin right
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  Speaker 3: now up five point four percent,