Mark Zuckerberg Says Meta’s AI Tool Is on Track to Be the ‘Most Used’ in the World
Investment in artificial intelligence will account for a significant increase in Facebook Parent company Meta will incur costs next year, but higher-than-expected advertising revenue was enough to reassure investors that the company’s business is on track.
Meta Platforms Inc. reported stronger-than-expected second-quarter results on Wednesday, sending its shares up sharply in after-hours trading. While the company did not say how much it will spend on AI next year, it made it clear that the figure will be significant.
The prospect of rising costs can often be scare investorsBut analysts say Meta’s latest results show the company can afford it, at least for now.
“The positive market reaction to Meta’s earnings report is a good indicator for AI stocks. If a company can show strong results from its core business, its investment in AI will be viewed more positively. If the core business shows any signs of weakness — as we saw last week with Alphabet YouTube — then the stock looks riskier,” said Debra Aho Williamson, founder and chief analyst at Sonata Insights.
She added that Meta stands out from other tech companies with AI ambitions because it already brings in “huge amounts” of advertising revenue — rather than trying to build a new business from scratch.
“And unlike Google“While Meta is grappling with making changes that will impact its core advertising business, most of its AI investments are aimed at improving ad performance across its products or building new features that could become revenue drivers,” Williamson said.
The Menlo Park, California-based company earned $13.47 billion, or $5.16 a share, in the April-June period. That was up 73% from $7.8 billion, or $2.98 a share, in the same period a year earlier.
Revenue rose 22% to $39.07 billion from $32 billion.
Analysts on average expected earnings of $4.72 per share on revenue of $38.26 billion, according to a FactSet poll.
“We had a strong quarter and Meta AI is on track to become the most used AI assistant in the world by the end of the year,” CEO Mark Zuckerberg said in a statement. On a conference call with analysts, Zuckerberg said Meta is in a “fortunate position” as strong results give the company the opportunity to invest in the future.
Daily active users for Meta’s family of apps—Facebook, Instagram, WhatsApp, and Messenger—were 3.27 billion in June, up 7% from the same period a year ago. The company no longer discloses user numbers for Facebook as it once did. The company recently revealed that WhatsApp has surpassed 100 million monthly users in the United States, and Zuckerberg said Threads, Meta’s X competitor, is about to reach more than 200 million monthly users.
Meta said it expects third-quarter revenue to be between $38.5 billion and $41 billion. Analysts expected $39.1 billion.
The company has not yet provided guidance for 2025 — it said it will provide guidance during its fourth-quarter earnings call — but it expects infrastructure costs to be a “significant driver of expense growth” next year. Like other large tech companies, Meta is investing heavily in building its AI capabilities, including in data centers, and expects “capital expenditures to grow significantly in 2025 as we invest to support our AI product research and development efforts.”
Thomas Monteiro, senior analyst at Investing.com, said Meta is well-positioned to grow “at a much faster pace than its competitors in both AI and advertising going forward.”
“That’s because Zuckerberg’s company has consistently shown signs that it can continue to grow at 20%+ per quarter in a much more efficient manner than other major tech companies, such as Alphabet and MicrosoftFor example; not only are they struggling to maintain double-digit revenue growth, they are also taking a bigger hit on margins,” he added.
Monteiro added that Meta’s strategy of focusing growth on younger users outside the US appears to be paying off, although the numbers “would be even better” if not for the Reality Labs segment dragging down revenue.
Shares of Meta rose $23.67, or 5%, to $498.50 in after-hours trading.
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