Facebook parent Meta posts stronger-than-expected Q2 results
Investments in artificial intelligence will account for a significant increase in Facebook parent company Meta’s expenses in the coming year, but stronger-than-expected revenue from its advertising business was enough to reassure investors that its business is on the right track.
Strong Q2 Results and Investor Confidence
Meta Platforms Inc. reported stronger-than-expected results for the second quarter on Wednesday, sending shares sharply higher in after-hours trading. While it didn’t disclose the exact amount it plans to spend on AI next year, the company emphasized that the investment would be significant. Analysts believe that Meta's ability to deliver strong results from its core business gives it the confidence to make these investments.
The company's positive response to Meta’s earnings report is seen as a positive indicator for AI stocks.
Meta’s substantial advertising revenue stream sets it apart from other tech companies with AI ambitions. Most of Meta’s AI investments are focused on improving advertising effectiveness on its platforms and developing new features for potential revenue generation.
Financial Performance
In the April-June period, Meta earned $13.47 billion, or $5.16 per share, representing a 73% increase from the same period last year. Revenue also saw a 22% rise to $39.07 billion. These results surpassed analysts' expectations, with the company outperforming both in earnings and revenue.
User Growth and Future Outlook
Meta’s family of apps, including Facebook, Instagram, WhatsApp, and Messenger, saw an increase in daily active users to 3.27 billion in June, a 7% rise from the previous year.
Although Meta did not provide guidance for 2025, it anticipates significant growth in infrastructure costs as it continues to invest in AI research and product development.
Market Response and Future Prospects
Meta's stock rose by 5% in after-hours trading following the strong Q2 results. Analysts believe that Meta is well-positioned to grow at a faster pace compared to its competitors in the AI and advertising spaces.
CEO Mark Zuckerberg expressed confidence in Meta AI becoming the most utilized AI assistant globally by the year-end. The company's focus on younger users outside the U.S. has been fruitful, contributing to its growth in the AI and ad sectors.
