Facebook and Instagram parent Meta (META) reported its second quarter earnings after the bell on Wednesday, beating Wall Street’s expectations on the top and bottom line. But the company did warn it expects to see significant capital expenditures growth in 2025.
AI spending is a key measure for Wall Street as investors anxiously await a return on Big Tech’s investments in the technology. During its prior quarter, Meta CFO Susan Li raised the company’s full-year total expense estimate from between $94 billion and $99 billion to between $96 billion and $99 billion.
For the second quarter, Meta saw earnings per share (EPS) of $5.16 on revenue of $39.07 billion. Analysts were expecting EPS of $4.74 on revenue of $38.3 billion, according to estimates compiled by Bloomberg. Meta recorded EPS of $2.98 on revenue of $31.9 billion during the same period last year.
Shares of Meta climbed more than 4% following the report.
The company’s Family of Apps revenue, which includes revenue from Facebook, Instagram, WhatsApp, and Messenger, clocked in at $38.72 billion, higher than estimates of $37.7 billion. Meta saw revenue of $31.7 billion in the segment in Q2 last year.
Beyond its advertising revenue, Wall Street is still trying to determine how much longer Meta will need to plow money into AI before it sees some kind of revenue payoff.
Last week, CEO Mark Zuckerberg announced Meta’s latest open-source large language model (LLM) called Llama 3.1. What’s more, the Facebook founder said the industry should focus on open-source AI rather than closed-source models like OpenAI’s ChatGPT.
Meta’s Reality Labs segment, which includes its mixed reality hardware and software, saw revenue of $353 million in the quarter versus expectations of $376 million. That’s better than the company reported in the same quarter last year, but the segment continues to hemorrhage cash.
In Q2, Meta reported that the segment lost some $4.49 billion, slightly below expectations of $4.53 billion. It lost $3.8 billion in Q1. The division has also been plagued by turnover and a lack of clear vision, adding to Reality Labs’ troubles, Yahoo Finance’s Yasmin Khorram reported.
Meta’s announcement also comes after Texas Attorney General Ken Paxton announced on Tuesday that he secured a $1.4 billion settlement between the state and Meta over the company’s alleged use of Texans’ biometric data without their permission for its Tag Suggestions feature.
Email Daniel Howley at [email protected]. Follow him on Twitter at @DanielHowley.
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