Each Meta employee, on average, accounted for more than $1 million in revenue in the first half of 2024, a company record — and AI is largely behind the boost.

Why it matters: Meta made steep cuts in late 2022 and early 2023, but its business keeps growing, thanks in large part to AI-driven improvements to the social media giant's recommendation system and ads platform.

Catch up quick: Apple's changes to its app-tracking policies in 2021 caught Meta so off-guard that it had to issue a rare update in between regular quarterly earnings reports to warn investors of the changes' impact on its business.

Yes, but: Fast forward three years, and Meta's business isn't just the biggest it's ever been — it's also the most efficient.

State of play: Despite new experiments like subscriptions and virtual reality hardware, the majority of Meta's business has always been, and will continue to be, advertising. (Advertising made up 98% of Meta's revenues in Q2 of this year.)

• Meta's ad business was primarily focused on the desktop until the smartphone became ubiquitous in 2014. Its mobile ad business has grown consistently, but faced a real threat in 2021 with Apple's privacy changes.
• Advertisers reliant on app data from Apple could no longer reliably use that data to target ads on Facebook.

That prompted Meta to build a suite of new AI-driven ad tools called Advantage+.

• Today, almost all of Meta's millions of advertising clients use at least one of the Advantage+ products, a spokesperson said.
• The Advantage+ AI tools help advertisers choose targets and optimize placement more easily and efficiently.
• A Meta-commissioned study of over 1 million U.S. advertisers, presented to clients in June, found that one dollar of investment per advertiser will now generate $3.71 in return for that advertisers' business, a 12% increase since 2022.

Between the lines: AI-driven content recommendations are also increasing users' engagement with the firm's products, driving more ad inventory.

• Ad impressions across delivered Meta's family of apps (Facebook, Instagram, Messenger, WhatsApp and Threads) increased by 10% year-over-year during the second quarter of 2024. The average price per ad, which is driven by demand, also increased by 10% year-over-year.
• More than 50% of the content people see on Instagram is recommended by AI, the company announced in April. (Reels alone makes up around 50% of time spent on the app.)
• Meta chief financial officer Susan Li said on Meta's most recent earnings call that the company is starting to test a feature that allows businesses to use AI in their chats with customers to help sell their goods and services, as well as to generate leads.

The bottom line: Meta's business might never have recovered from Apple's 2021 changes and 2022's advertising industry slowdown if it hadn't rebuilt its recommendation engine and ad platform around AI tools.

What's next: Meta's next big investment will be developing generative AI products that allow advertisers to make and test many new iterations of ads' creative content.

• "Over the long term, advertisers will basically just be able to tell us a business objective and a budget, and we're going to go do the rest for them. We're going to get there incrementally over time, but I think this is going to be a very big deal," CEO Mark Zuckerberg told investors in July.

Chip giant Advanced Micro Devices has agreed to buy ZT Systems, a designer and builder of server equipment, in a $4.9 billion cash and stock deal.

Why it matters: The acquisition, announced Monday morning, shows just how far ahead rival Nvidia is in AI tech infrastructure compared to everybody else.

Zoom in: After the deal closes, AMD will sell ZT Systems' U.S.-based data center infrastructure manufacturing and hold onto its system-design business.

• "They really just want the 1,000 design engineers. That's what this is," Stacy Rasgon, managing director and senior analyst at Bernstein Research, tells Axios.

Context: Artificial intelligence requires complex computing, and that's why businesses are looking to buy more than just chips, says Rasgon.

• Customers want whole systems of hardware, chips, networking and software designed for them, Rasgon said.
• AMD's bid now for ZT Systems is "a bit of an admission that they were weak here."

State of play: The fastest way, currently, to roll out an at-scale AI solution is to simply buy one from Nvidia, tech analyst Ben Thompson noted in Stratechery Monday.

• With ZT Systems, AMD can deliver customized solutions "much more quickly, helping it gain marketshare in the ongoing AI landgrab," Thompson wrote.

What they're saying: "The next major arc for AMD is AI," CEO Lisa Su said on an analyst call yesterday.

• "We must have the capabilities and expertise to optimize solutions at the systems, rack and even the data-center level."
• ZT's engineers will enable AMD to align "silicon and software road maps" to what large cloud companies need and speed up execution, she added.

The big picture: M&A's been a key part of AMD's strategy to narrow Nvidia's lead.

• Just last week, AMD completed a $665 million all-cash acquisition of Silo AI, an AI integration firm based in Finland.
• Over the past two years, it's also shelled out nearly $37 billion altogether for Xilinx and Pensando Systems to boost chip offerings, networking and security.

What we're watching: Nvidia has started selling more software to AI developers, and has even set up its own server rental business to defend against any slowing demand for its products, The Information has reported.

• Nvidia next reports earnings Aug. 28.

• Mobile creativity software provider Procreate pledged Monday that it won't be adding generative AI to its products. (The Verge)
• A candidate for mayor in Wyoming is vowing to use an AI bot to make decisions if elected; he's already run afoul of OpenAI's rules governing ChatGPT's use in politics. (Washington Post)
• Former Autonomy CEO Mike Lynch is missing after the yacht he was on sunk off the coast of Sicily. (Axios)
• Stability.ai named Hanno Basse as its new CTO. The former Microsoft Azure executive was most recently CTO of Digital Domain, a visual effects and production company.

In a new, more wholesome version of the Tide pod challenge, this video shows how the laundry detergent's orange canisters can be reused as plastic jack-o-lanterns.