Second-quarter earnings and revenue data released Wednesday by Meta were well above analyst expectations, marking the 10th-straight quarter in which Meta reported a profit beat as the company invests more in artificial intelligence.
Wall Street expected double-digit annual increases for Meta’s earnings and revenue.
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Key Takeaways
- Meta reported $47.5 billion in revenue and $7.14 earnings per share through Q2, accounting for an annual increase of 22% and 38%, respectively.
- Those figures smashed Wall Street’s forecasts of $44.8 billion and $5.88 EPS, or year-over-year growth of 11% and 12.7%, respectively, according to FactSet.
- Meta narrowed its estimates for capital expenditures to a range of $66 billion to $72 billion for the year, after an earlier outlook of $64 billion to $72 billion, as the company said it would “continue aggressively pursuing opportunities” related to its “artificial intelligence efforts and business operations.”
- Surpassing projections for profit marks the 10th-straight quarter Meta reported a profit beat, after Meta’s EPS came more than a dollar above projections in the first quarter, while a revenue beat marks Meta’s 12th in a row after topping estimates by nearly $1 billion last quarter.
- Meta’s shares surged nearly 10% in after-hours trading, after the company forecast third-quarter sales between $47.5 billion and $50.5 billion, exceeding Wall Street’s estimates of about $46.1 billion.
Key Background
Meta’s stock has jumped 17% on the year amid growth for Mark Zuckerberg’s firm. Analysts have eyed Meta’s performance as the company increases investments into AI, with Zuckerberg noting earlier this month Meta would inject “hundreds of billions of dollars” into computing infrastructure for AI projects.
Analysts from Cantor said in a note Meta’s AI spending in recent months, including a $14.3 billion investment last month into Scale AI, bringing the company’s founder Alexandr Wang in to co-lead Meta’s “Superintelligence” unit, wouldn’t raise Meta’s projections for expenses. Wells Fargo analysts said earlier this month that Meta was “taking decisive action to fortify its AI bets,” adding, “The market has received the investments favorably, but expectations for the returns [are also] rising.”
What To Watch For
With Meta and Microsoft unveiling earnings reports Wednesday, Amazon, Apple and Nvidia are the last of the “Magnificent Seven” to release Q2 earnings. Amazon and Apple will report second-quarter earnings after market close Thursday, while Nvidia will report Aug. 27. Google parent Alphabet and Tesla reported last week, as Alphabet beat revenue and earnings estimates while Tesla posted its largest revenue decline in more than a decade.
