Meta CEO Mark Zuckerberg during an appearance at SIGGRAPH 2024 in Denver, Colo. (AP Photo/David Zalubowski) (ASSOCIATED PRESS)
Meta Platforms (META), the parent company of Facebook and Instagram, reported its second-quarter earnings on Wednesday, surpassing Wall Street’s expectations on both the top and bottom lines. However, the company cautioned about “significant” growth in capital expenditures for 2025.
“While we do not intend to provide any quantitative guidance for 2025 until the fourth quarter call, we expect infrastructure costs will be a significant driver of expense growth next year as we recognize depreciation and operating costs associated with our expanded infrastructure footprint,” CFO Susan Li said in a statement.
AI spending remains a critical measure for Wall Street as investors eagerly await returns on Big Tech’s investments in the technology. In the previous quarter, Li raised the company’s full-year total expense estimate from between $94 billion and $99 billion to between $96 billion and $99 billion.
For the second quarter, Meta reported earnings per share (EPS) of $5.16 on revenue of $39.07 billion, surpassing analysts’ expectations of $4.74 EPS on $38.3 billion in revenue, according to Bloomberg. This compares to EPS of $2.98 on $31.9 billion in revenue during the same period last year.
Meta’s Family of Apps revenue, including Facebook, Instagram, WhatsApp, and Messenger, reached $38.72 billion, exceeding estimates of $37.7 billion. This segment saw revenue of $31.7 billion in Q2 last year.
Following the report, Meta’s stock climbed more than 4%.
Beyond its advertising revenue, Wall Street is closely monitoring Meta’s investments in AI to determine when these will yield significant revenue returns. Last week, CEO Mark Zuckerberg introduced Meta’s latest open-source large language model (LLM), Llama 3.1, advocating for open-source AI over closed-source models like OpenAI’s ChatGPT.
Meta’s Reality Labs segment, encompassing its mixed reality hardware and software, generated $353 million in revenue for the quarter, falling short of expectations of $376 million. However, this was an improvement from the same quarter last year. The segment continues to incur substantial losses, reporting a loss of $4.49 billion in Q2, slightly below expectations of $4.53 billion, compared to a $3.8 billion loss in Q1. The division has faced challenges such as high turnover and a lack of clear vision, as reported by Yahoo Finance’s Yasmin Khorram.
In other news, Texas Attorney General Ken Paxton announced on Tuesday a $1.4 billion settlement with Meta over the company’s alleged use of Texans’ biometric data without their permission for its Tag Suggestions feature.
#MetaEarnings #TechInvestments #AIExpansion #RealityLabs #FinancialNews