Meta shares rose in after-hours trading Wednesday on the back of a strong earnings report that comes as the company is spending heavily on artificial intelligence tools.
The company’s stock price rose about 5% following the report, which showed the company beat analysts’ expectations for its second quarter.
Meta, the owner of Facebook, Instagram and WhatsApp, reported $39.07 billion in revenue and $5.16 in earnings per share. Both results beat market forecasts for revenue of $38 billion and $4.70 per share, while the company also reported capital expenditures of $8.47 billion, lower than analysts had expected.
“We had a strong quarter and Meta AI is on track to become the most widely used AI assistant in the world by the end of the year,” Meta CEO Mark Zuckerberg said in a statement. “We’ve launched the first open-source frontier-grade AI model, continue to see good momentum with our Ray-Ban Meta AI glasses, and are driving good growth across all of our apps.”
Meta also reported strong earnings for its previous quarter, but its outlook for the rest of the year is causing concern. caused the shares to fall Up to 16% before recovering in the following months. Meta’s more positive earnings forecasts on Wednesday seemed to prevent a similar outcome.
Much of Meta’s recent efforts have involved developing AI models and incorporating them into its platforms. Zuckerberg stated earlier this year that his goal was to “get millions or billions of people using Meta AI.” Meta launched its latest AI model, called LLama 3.1 405B, earlier this month in an attempt to compete with companies like OpenAI and Anthropic. The company expects a major source of its capital spending growth in 2025 to be related to AI investments, it said 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 justify the spending. Shares of Alphabet, Tesla and Microsoft all fell after their earnings reports this month, amid a Higher market turnover from large technology stocks to smaller companies.
Earlier this week, Meta also reached a $1.4 billion settlement in a privacy lawsuit in Texas that alleged the company was taking users’ biometric data without their consent. The company is facing another major lawsuit in New Mexico, where the state’s attorney general sued Meta for accusations which did not protect young users from child sexual exploitation.