Meta's new AI model shows early promise, but investors want to see Zuckerberg's strategy

With Mark Zuckerberg counting on Meta's new artificial intelligence model, Muse Spark, to revive his company's standing in the booming AI market, guidance and commentary are going to be of heightened importance following first-quarter earnings on Wednesday. That's because the new model, formerly codenamed Avocado, was unveiled in early April, just as the second quarter was getting underway. Muse Spark marks a turning point in Meta's AI strategy, moving it away from the previous Llama models, which were released for free to the open-source community. Meta indicated that it eventually wants to make money from the technology by offering paid access to developers, similar to the approach being pursued by OpenAI, Anthropic and Google. What's important today, analysts say, is that Meta's AI tools continue to bolster its dominant ad business, and that the company shows its AI technology can compete with the market leaders. According to Arena.AI, a site that tracks quality and performance of the top models, Meta AI trails Anthropic's Claude and Google's Gemini in text, but only Claude in vision, as of Sunday. In both areas it's currently ahead of OpenAI's GPT. Claude also leads in the categories of document and code, where Meta is further down the leaderboard. In a report to clients last week, analysts at Citizens described AI as a "complementary good" for Meta, and said they expect to hear much more on the company's earnings call. "We are impressed with Meta's Muse Spark model," the analysts, who recommend buying the stock, wrote in the report, citing the model's strength in text and vision. "While the company integrated Meta AI into its core apps, we are awaiting a strategy to drive scaled consumer usage that is akin to other AI chatbots like ChatGPT and Claude as we believe this can unlock new data and ad budgets."

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