Meta’s shares rose in after-hours trading on Wednesday off the back of a strong earnings report that comes as the company is spending heavily on AI tools.
The company’s stock price grew around 5% following the report, which revealed the company outperformed analysts’ expectations for its second quarter.
Meta, which owns Facebook, Instagram and WhatsApp, reported $39.07bn in revenue and $5.16 earnings per share. Both results outpaced market predictions of around $38bn in revenue and $4.7 per share, while the company also reported $8.47bn in capital expenditures – lower than analysts expected.
“We had a strong quarter, and Meta AI is on track to be the most used AI assistant in the world by the end of the year,” Mark Zuckerberg, Meta’s CEO, claimed in a statement. “We’ve released the first frontier-level open source AI model, we continue to see good traction with our Ray-Ban Meta AI glasses, and we’re driving good growth across our apps.”
Meta also reported strong earnings in its previous quarter, but concern over its outlook for the rest of the year led the stock to fall as much as 16% before rebounding in the ensuing months. Meta’s more positive revenue forecasts on Wednesday appeared to prevent a similar outcome.
Much of Meta’s recent efforts have involved developing artificial intelligence models and incorporating them into its platforms, with Zuckerberg stating earlier this year that his goal was “getting millions or billions of people to use Meta AI”. Meta released its latest AI model, called LLama 3.1 405B, earlier this month in a bid to compete with companies such as OpenAI and Anthropic. The company expects that a major source of its capital expenditure growth in 2025 will be related to investments in AI, it stated in Wednesday’s earnings report.
Other big tech companies have struggled in recent weeks as earnings reports have failed to show that their multibillion-dollar investments in AI are producing returns that would justify the spending. Shares in Alphabet, Tesla and Microsoft all fell following their earnings reports this month, amid a wider market rotation away from big tech stocks toward smaller companies.
Earlier this week, Meta also reached a $1.4bn settlement in a Texas privacy lawsuit that alleged the company was taking users’ biometric data without their consent. The company faces another major lawsuit in New Mexico, where the state attorney general sued Meta over allegations that it failed to protect young users from child sexual exploitation.