Meta Platforms Inc. (NASDAQ:META) shares surged more than 9% in early trading on Thursday, following the company’s better-than-expected earnings report for the second quarter. Despite the impressive earnings, Meta warned of significant growth in capital expenditures for 2025.
CFO Susan Li indicated that while the company will provide quantitative guidance for 2025 in the fourth-quarter call, infrastructure costs are anticipated to be a major driver of expense growth next year. This will include depreciation and operating costs associated with Meta’s expanded infrastructure footprint.
AI spending continues to be a critical focus for Wall Street as investors seek returns on Big Tech’s investments in technology. In the prior quarter, Li adjusted the company’s full-year expense estimate to a range between $96 billion and $99 billion, up from the previous range of $94 billion to $99 billion.
For the second quarter, Meta reported earnings per share (EPS) of $5.16 on revenue of $39.07 billion. Analysts had projected an EPS of $4.74 and a revenue of $38.3 billion, based on estimates compiled by Bloomberg. This compares to an EPS of $2.98 on revenue of $31.9 billion in the same period last year.
Revenue from Meta’s Family of Apps, which includes Facebook, Instagram, WhatsApp, and Messenger, reached $38.72 billion, exceeding estimates of $37.7 billion. This is up from $31.7 billion in the same segment in Q2 last year.
Beyond advertising revenue, investors are keen to understand how long Meta will continue investing in AI before seeing substantial revenue benefits. Last week, CEO Mark Zuckerberg unveiled Meta’s latest open-source large language model (LLM), Llama 3.1. Zuckerberg emphasized the industry’s shift towards open-source AI over closed-source models like OpenAI’s ChatGPT.
Forrester Research Director Mike Proulx commented that while Meta is well-positioned to leverage generative AI for advertisers, the industry is still far from a point where CMOs will rely entirely on AI agents for ad creative. He noted that despite advancements in generative AI, human involvement in the advertising process remains crucial.
Meta’s Reality Labs segment, encompassing mixed reality hardware and software, reported revenue of $353 million for the quarter, falling short of the expected $376 million. Although this is an improvement over the same quarter last year, the segment continues to experience substantial financial losses. In Q2, Reality Labs lost approximately $4.49 billion, slightly better than the $4.53 billion loss anticipated, but an increase from the $3.8 billion loss in Q1. The segment has faced challenges such as high turnover and a lack of clear vision, as reported by Yahoo Finance’s Yasmin Khorram.
Additionally, Meta’s earnings announcement follows Texas Attorney General Ken Paxton’s Tuesday revelation of a $1.4 billion settlement with the state. The settlement addresses allegations that Meta used Texans’ biometric data without permission for its Tag Suggestions feature.
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Author Faith Yakubu 
