Meta (META) plans to increase its spending on AI, but its latest earnings report suggests that such investments are already yielding positive results. Shares of the Facebook parent company surged more than 4% to just over $572 on Thursday after Meta reported better-than-expected quarterly results, driven by growth in advertising revenue—a significant contributor to its overall earnings.

CEO Mark Zuckerberg highlighted that AI improvements had enhanced Meta’s ability to target and engage users more effectively, surpassing what many businesses can achieve on their own. These advancements in AI-powered recommendation systems have led to increased user engagement across Meta’s platforms, with time spent on Facebook rising by 7%, Instagram seeing a 6% jump, and Threads—a platform launched in 2023—experiencing a remarkable 35% increase in user engagement.

Meta’s robust performance sparked positive reactions from analysts. Several firms, including Citi, JPMorgan, Wedbush, and Jefferies, raised their price targets for Meta’s stock. Bank of America analysts increased their target from $640 to $690, citing the tangible results Meta is achieving from its AI investments. Morgan Stanley also raised their price target from $615 to $650, praising Meta’s “best-in-class” ad product and strong return on investment.

In his earnings call, Zuckerberg reassured investors that even with increased AI spending, Meta did not need to succeed in every AI initiative to deliver a strong return on investment. However, he expressed confidence that if these investments paid off as expected, the company would be “wildly happy” with the results.

Meta’s ability to leverage AI for better user engagement and ad targeting, alongside its strategic investments in AI technology, positions the company for continued growth in the competitive social media and digital advertising landscape.