Revenue and AI Strategy Fuel Investor Optimism
Meta’s stock jumped over 10% after the company posted second-quarter earnings that topped Wall Street expectations. Revenue reached $47.52 billion, outpacing forecasts of $44.80 billion. Earnings per share came in at $7.14, beating the projected $5.92. CEO Mark Zuckerberg credited Meta’s artificial intelligence systems for boosting ad performance, helping the company’s advertising revenue hit $46.56 billion — well ahead of the $43.97 billion consensus.
Meta expects third-quarter revenue to fall between $47.5 billion and $50.5 billion, beating analysts’ predictions of $46.14 billion. The company’s daily active user base across its family of apps reached 3.48 billion, exceeding expectations and up from the prior quarter’s 3.43 billion.
Massive Investments and Vision for AI
Meta continues to ramp up investment in AI. In June, it invested $14.3 billion in Scale AI, and Scale’s CEO Alexandr Wang has joined Meta as co-lead of the new Superintelligence Labs. Meta’s total nonmarketable equity investments in the second quarter reached $15.1 billion. These moves come after mixed feedback to the Llama 4 AI model, prompting a strategic overhaul.
In a letter published Wednesday, Zuckerberg outlined a vision for “personal superintelligence” — AI that empowers individual creativity and connection, rather than mere efficiency. He suggested that Meta’s AI systems are starting to improve themselves and said that AI “that surpasses human intelligence in every way we think” is now within reach.
Reality Labs Losses and Expense Growth
Despite tech gains, Reality Labs — Meta’s division for VR and AR — posted a $4.53 billion loss on $370 million in sales. That loss was narrower than expected, but revenue still fell short of estimates. Meta’s total second-quarter expenses were $27.08 billion, up 12% from the prior year, with capital expenditures now projected between $66 billion and $72 billion.
The company forecasts 2025 total expenses between $114 billion and $118 billion, slightly raising the low end of its previous guidance. Meta CFO Susan Li mentioned that Meta is considering partnerships to co-develop data centers, aiming to attract external capital for large-scale infrastructure expansion.
Outlook and Industry Comparison
Net income rose 36% year over year to $18.34 billion. While Meta expects third-quarter growth to remain strong, it anticipates a slower pace in the fourth quarter due to tougher comparisons with 2024’s strong finish. Meta did not provide an explicit Q4 sales forecast.
The strong performance follows Google’s recent earnings beat. Amazon and Reddit will report their results Thursday, while Snap and Pinterest are scheduled to release earnings early next week, offering further insight into the tech and ad landscape.
