Meta, the parent company of Facebook and Instagram, reported its second-quarter earnings, surpassing Wall Street’s expectations. However, the company cautioned about “significant” capital expenditure growth in 2025.
CFO Susan Li stated, “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.”
Wall Street is closely monitoring AI spending, eager for returns on Big Tech’s investments. Last quarter, Li adjusted Meta’s full-year total expense estimate to between $96 billion and $99 billion, up from an earlier range.
For Q2, Meta reported earnings per share (EPS) of $5.16 on $39.07 billion in revenue, beating analysts’ expectations of $4.74 EPS on $38.3 billion in revenue. In the same period last year, Meta recorded EPS of $2.98 on $31.9 billion in revenue.
Meta’s Family of Apps, which includes Facebook, Instagram, WhatsApp, and Messenger, generated $38.72 billion in business revenue, exceeding estimates of $37.7 billion and significantly higher than last year’s $31.7 billion.
Following the report, Meta’s stock rose over 4%.
Beyond ad revenue, investors are keen to see when Meta’s hefty AI investments will yield returns. CEO Mark Zuckerberg recently introduced Meta’s latest open-source large language model, Llama 3.1, advocating for open-source AI over closed-source models like OpenAI’s ChatGPT.
Meta’s Reality Labs segment, covering mixed reality hardware and software, reported $353 million in revenue against expectations of $376 million. Despite this, the segment remains unprofitable, losing $4.49 billion in Q2, slightly below the anticipated $4.53 billion loss. The segment’s ongoing challenges include high turnover and lack of direction.
Additionally, Texas Attorney General Ken Paxton announced a $1.4 billion settlement with Meta over the unauthorized use of Texans’ biometric data for its Tag Suggestions feature.
Meta continues to navigate a complex landscape of high expenditures and technological advancements, with Wall Street watching closely for future profitability and strategic direction.
You May Also Like:
