TMTPOST -- Meta Platforms, Inc. stock jumped more than 11% to settle at $773.44 on Thursday, refreshing its record close set more than five months ago. Shares reversed its two-day decline after Facebook parent posted blowout earnings and vowed to ramp up investment in artificial intelligence (AI).
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Meta delivered a huge earnings beat for the quarter ended June 30. Diluted earnings per share (EPS) popped 38.4% year-over-year (YoY) to $7.14, $1.25, or 21.2%, ahead of analysts estimated $5.89. Revenue popped 22% YoY to $47.52 billion, beating Wall Street projection of $44.83 billion. Operating income soared 38% YoY to $20.44 billion and operating margin increased 5 percentage points YoY to 43%, also above estimated income of $17.24 billion with a margin of 38.3%.
The closed-watched bread & butter advertising earned $46.56 billion from April to June with a 21% YoY rise, versus analysts estimated $44.07 billion. Meta needs its advertising business to continue growing in order to fund an expensive expansion in artificial intelligence, which is driving the future of the business through improvements to ads, algorithms and personalization.
Family of Apps revenue added 22% YoY to $47.15 billion for the second quarter, compared with expected $44.4 billion. Revenue from Reality Labs, the hardware unit that houses metaverse technologies, gained 4.8% YoY to $370 million, above expectation of $386 million. The segment reversed a 6.4% decline in revenue for the first quarter.
Meta kept three-digital increase in capital expenditure (Capex), a gauge reflecting how the company is investing in its outsize AI ambitions. Capex around doubled from a year ago to $17.01 billion. “The investments it’s making in AI are already paying off in its ads business,” said Jasmine Enberg, principal analyst at research firm eMarketer.
Meta’s guidance remained solid. It expected revenue for the third quarter to be in the range of $47.5 billion to $50.5 billion, higher than the average analyst estimate of $46.2 billion. The company said that while it is "not providing an outlook for fourth quarter revenue, we would expect our year-over-year growth rate in the fourth quarter of 2025 to be slower than the third quarter as we lap a period of stronger growth in the fourth quarter of 2024."
For the full year, Meta called for total expenses to be in the range of $114 billion to $118 billion, higher than the prior outlook of $113billion to $118 billion and reflecting a YoY growth rate of 20% to 24%. Meta also said it sees 2026 year-over-year expense growth to be above 2025, and cited infrastructure costs and, obviously, employee compensation which is to be expected in light of anecdotes it is paying $100 million guarantees to AI scientists.
Looking at the all important Capex, Meta now sees Capex for this year, including principal payments on finance leases, to be in the range of $66 billion to $72 billion, also higher from the previous estimate of $64billion to $72 billion and up a stunning $30 billion,or 4.5% YoY at the mid-point. The company said that it "currently expects another year of similarly significant capital expenditures dollar growth in 2026 as we continue aggressively pursuing opportunities to bring additional capacity online to meet the needs of our artificial intelligence efforts and business operations.”
Meta CEO Mark Zuckerberg attributed AI for boosting its results.“The strong performance this quarter is largely thanks to AI unlocking greater efficiency and gains across our ad system,” he told analysts at an earnings call.
"We've had a strong quarter both in terms of our business and community," Zuckerberg said in a statement. "I'm excited to build personal superintelligence for everyone in the world." Prior to financial report, Zuckberg posted a video touting his vision for personal superintelligence. He expected the creation of superintelligence will herald a new era of personal empowerment.
“AI keeps accelerating, and over the past few months, we’ve begun to see glimpses of AI systems improving themselves,” Zuckerberg said in the video posted on Facebook. “So developing superintelligence is now in sight, but there’s this big open question about what we should direct superintelligence towards.”
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