Meta Platforms shares soared more than 10% overnight after the social media company reported a second-quarter earnings beat on revenue.
A stronger-than-expected forecast for the current period appears to have reassured investors that the underlying strength of the advertising business can support the Instagram and Facebook owner's ambitious AI strategy overhaul.
It’s understood that CEO Mark Zuckerberg has committed big money to AI to help Meta regain momentum after a lukewarm developer response to its Llama 4 AI model.
To account for ongoing trade disputes and AI investments the company now expects to spend US$66 billion to US$72 billion this year.
Meta commenced its AI hiring bonanza in June by investing US$14.3 billion into Scale AI, landing the data-annotating startup’s CEO Alexandr Wang to co-lead the new Meta Superintelligence Labs as chief AI officer.
Commenting on the company’s Scale AI and related AI spending, finance chief Susan Li told the market that Meta made US$15.1 billion in nonmarketable equity investments in the second quarter, including a minority investment in Scale AI, along with other investment activities.
In a letter published on Wednesday morning, Zuckerberg outlined his vision of “personal superintelligence” and noted that the cutting-edge tech should be used for “personal empowerment” over automation and efficiency.
“Super intelligence empowers people to be more creative, develop their culture and communities, connect with each other and lead more fulfilling lives,” said Zuckerberg.
“Over the last few months, we’ve begun to see glimpses of our AI systems improving themselves, and the improvement is slow for now, but undeniable.”
Meta told the market to expect total expenses for 2025 to fall between $114 billion and $118 billion - at the lower end of its previous outlook of between $113 billion and $118 billion – and said it was “exploring ways to work with financial partners to co-develop data centers.”
“We don’t have any finalized transactions to announce, but we generally believe that there will be models here that will attract significant external financing to support large-scale data center projects that are developed using our ability to build world-class infrastructure,” noted Susan Li.
Key second quarter numbers
- Net income rose 36% year on year to US$18.34 billion.
- Total costs and expenses were US$27.08 billion, up 12% year on year.
- Daily active people for Meta’s family of apps grew to 3.48 billion, ahead of the expected 3.45 billion.
- Advertising revenue came in at US$46.56 billion, ahead of analysts’ projections of US$43.97 billion.
- Sales grew 22% year on year.
- Revenue came in a US$47.52 billion beating analysts' expected US$44.80 billion.
- Earnings per share came in at US$7.14 beating the expected US$5.92.
Meanwhile, Reality Labs, Meta’s unit tasked with developing virtual reality and augmented reality technologies, recorded an operating loss of US$4.53 billion on US$370 million in sales during the second quarter. Both figures were less than analysts’ estimates.
Third-quarter sales are expected to come in between US$47.5 billion and US$50.5 billion, ahead of analysts’ estimates of US$46.14 billion.
While Meta refrained from providing a fourth-quarter sales outlook for, it expects the year-on-year growth rate in that quarter to be slower than the third quarter “as we lap a period of stronger growth in the fourth quarter of 2024.”
