Facebook parent company Meta posts better-than-expected Q2 results, sending shares higher after close

SAN FRANCISCO — Investments in artificial intelligence will drive a significant increase in spending by Facebook-owned Meta next year. But higher-than-expected advertising revenue was enough to reassure investors that the company is on the right track.

Meta Platforms Inc. reported better-than-expected second-quarter results on Wednesday, sending shares soaring in after-hours trading. While it didn’t say how much it plans to spend on AI next year, the company made clear it will be significant.

The prospect of rising costs often puts off investors, but 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 demonstrate strong performance from its core business, its AI investments will be viewed more positively. If the core business shows any signs of weakness — as we saw last week with Alphabet’s YouTube — the stock may seem riskier,” said Debra Aho Williamson, founder and principal analyst at Sonata Insights.

She added that Meta stands out from other tech companies with AI ambitions because it already generates “huge” advertising revenues — rather than trying to build a new business from scratch.

“Unlike Google, which is struggling to make changes that will impact its core advertising business, most of Meta’s AI investments are aimed at either improving the way ads work on its sites or developing new features that could become revenue drivers over time,” Williamson said.

The Menlo Park, California-based company earned $13.47 billion, or $5.16 per share, in the April-June period, up 73% from $7.8 billion, or $2.98 per 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 survey.

“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,” CEO Mark Zuckerberg said in a statement. On a conference call with analysts, Zuckerberg said Meta is in a “fortunate position” where strong results give it the ability to invest in the future.

Daily active users for the Meta family of apps — Facebook, Instagram, WhatsApp, and Messenger — were 3.27 billion in June, up 7% from a year earlier. The company no longer discloses Facebook user data as it has in the past. The company recently revealed that WhatsApp has reached more than 100 million monthly users in the U.S., and Zuckerberg said that X Meta rival Threads is on pace 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 were expecting $39.1 billion.

The company hasn’t yet provided guidance for 2025 — it said it will do so on its fourth-quarter earnings conference call — but it expects infrastructure costs to be a “significant driver of expense growth” in the coming year. Like other large tech companies, Meta is investing heavily in developing its AI capabilities, including data centers, and expects “significant increases in capital expenditures in 2025 as we invest in AI research and product 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.”

“That’s because Zuckerberg’s company continues to show it can grow at more than 20% per quarter far more efficiently than other major tech competitors like Alphabet and Microsoft, which have not only struggled to maintain double-digit revenue growth but have also seen their margins steadily decline,” he added.

Monteiro added that Meta’s strategy of focusing growth on younger users outside the U.S. appears to be working, though the numbers “would be even better” if not for the revenue-draining Reality Labs segment.

Meta shares rose $23.67, or 5%, to $498.50 in after-hours trading.