Meta's Q2 2024 Earnings Surpass Expectations, Boosting Stock and Outlook

Facebook parent Meta posts stronger-than-expected Q2 results

Investments in artificial intelligence will account for a significant increase in Facebook parent company Meta's expenses in the coming year, but stronger-than-expected revenue from its advertising business was enough to reassure investors that its business is on the right track. Meta Platforms Inc. reported stronger-than-expected results for the second quarter on Wednesday, sending shares sharply higher in after-hours trading. While it didn't say how much it expects to spend on AI next year, the company made it clear it would be significant. The prospect of soaring expenses can often spook investors, but analysts said Meta's latest results show it can afford it, at least for now. "The market's positive response to Meta's earnings report is a bellwether for AI stocks. If a company can show strong results from its core business, its investments in AI will be seen more positively. If the core business is showing any sign of weakness -- as we saw last week with Alphabet's YouTube -- then the stock may seem more risky," said Debra Aho Williamson founder and chief analyst at Sonata Insights. She added that Meta stands out from other tech companies with AI ambitions because it already brings in a "massive amount" of advertising revenue -- rather than trying to build a new business from scratch. "And unlike Google, which is grappling with making changes that will impact its core ad business, most of Meta's AI investments are either aimed at making advertising on its properties work better or at building new features that could eventually become revenue drivers," Williamson said. The Menlo Park, California-based company earned $13.47 billion, or $5.16 per share, in the April-June period. That's 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, were expecting earnings of $4.72 per share on revenue of $38.26 billion, according to a poll by FactSet. "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," said CEO Mark Zuckerberg in a statement. During a conference call with analysts, Zuckerberg said Meta is in a "fortunate position" where strong results give it the opportunity to invest in the future. The number of daily active users for Meta's family of apps -- Facebook, Instagram, WhatsApp and Messenger -- was 3.27 billion for June, an increase of 7% from a year earlier. The company no longer breaks out user figures for Facebook as it had in the past. The company did disclose recently that WhatsApp has reached more than 100 million monthly users in the U.S. and Zuckerberg said that Threads, Meta's X rival, is about to hit more than 200 million monthly users. Meta said it expects its third-quarter revenue to land in the range of $38.5 billion to $41 billion. Analysts are expecting $39.1 billion. The company hasn't given guidance for 2025 yet -- it said it will do so during its fourth-quarter earnings call -- but it expects infrastructure costs to be a "significant driver of expense growth" in the coming year. Like other big tech companies, Meta is investing heavily in building its artificial intelligence capacity, including in data centers, and expects "significant capital expenditures growth in 2025 as we invest to support our artificial intelligence research and product development efforts." Meta is in a good position to grow "at a much faster pace than the competition in both the AI and ad spaces going forward," said Thomas Monteiro, senior analyst at Investing.com. "That's because Zuckerberg's company keeps showing signs that it is able to keep growing at the 20%+ per quarter level in a much more efficient way than other big tech peers, such as Alphabet and Microsoft, for example; which are not only struggling to keep revenue growth in the double digits, but also are progressively taking a bigger hit on the margins side," he added. Monteiro added that Meta's strategy of focusing its growth on younger users outside of the U.S. appears to be paying off, though the numbers "would have been even better" were it not for its Reality Labs segment dragging revenue lower.

Meta's stock rises on strong earnings, revenue growth and confident outlook - SiliconANGLE

Meta's stock rises on strong earnings, revenue growth and confident outlook Shares of Meta Platforms Inc. gained more than 6% in after-hours trading today after the company posted solid earnings and revenue that exceeded analysts' expectations and provided a strong forecast for the current quarter. In its second quarter financial results, Meta delivered earnings before certain costs such as stock compensation of $5.16 pers share, crushing the analyst consensus estimate of $4.73, while revenue rose by an impressive 22% to $39.07 billion. That was also well ahead of the analysts' forecast, of $38.31 billion in sales. All told, Meta delivered net income of $13.47 billion, up by an impressive 73% from a year earlier when its profit was less than $8 billion. For the third quarter, Meta's finance chiefs said they're looking at revenue of between $38.5 billion to $41 billion, which translates to $39.75 billion at the midpoint. That's better than expected too, as Wall Street had earlier forecast Meta's third quarter sales at $39.1 billion. The social media platforms giant once again showed impressive growth in its digital advertising business. Ad revenue, which is mostly derived from Meta's Facebook and Instagram platforms, shot up by 22% from a year earlier - more impressive than Google LLC's ad growth rate of just 11, which was reported last week. During the quarter, Meta had to spend $24.2 billion on expenses, including a $1.4 billion charge relating to its recent settlement with the state of Texas over a lawsuit about facial recognition data. Capital expenditures were reported at $8.47 billion, lower than the analyst forecast of $9.51 billion. In a conference call, Meta officials said that the company's expense outlook for the full fiscal year remains the same, at between $96 billion and $99 billion, but they narrowed the range regarding capital expenditures, which is now between $37 billion and $40 billion. Previously, the company had forecast a wider range of between $35 billion and $40 billion. Meta got bigger during the quarter, with daily active people rising 7% to 3.3 billion. Ad impressions increased by 10% from a year earlier, and ad prices jumped 10%. However, the company once more reduced its headcount, with However, Meta continued to downsize its overall headcount, which fell 1% from a year earlier to 70,799 as of June 30. Investing.com analyst Thomas Monteiro said Meta looks like it's well-placed to grow at a much faster clip than its rivals in both AI and advertising. "That's because [it] keeps showing signs that it is able to grow at the 20%+ per quarter level in a much more efficient way than other big tech peers, such as Alphabet and Microsoft," he said. He added that those rivals are "not only struggling to keep revenue growth in the double-digits, but also progressively taking a bigger hit on the margins side." Meta Chief Executive Mark Zuckerberg (pictured) said in a statement that the company had a strong quarter. He added that its significant investments in artificial intelligence infrastructure and research are also paying off, as is its focus on virtual reality technology. "Meta AI is on track to be the most-used AI assistant in the world by the end of the year," Zuckerberg promised. "We've release 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." On the conference call, Zuckerberg explained that the company is busy refining its plans for next year, and expects to see significant growth in its capital expenditures in 2025 as it funnels even more money into its AI research and product development efforts. The Facebook founder said earlier this year that Meta will spend billions of dollars on building out its AI computing infrastructure, and plans to own 350,000 of Nvidia Corp.'s H100 graphics processing units by the end of 2024. Those GPUs are widely considered to be essential for training AI models, but they're not the only thing in Meta's AI arsenal, for it plans to have "almost 600,000 H100 equivalents of compute if you include other GPUs," Zuckerberg said at the time. Sonata Insights analyst Debra Aho Williamson told the Associated Press that those investments will cost the company billions of dollars. "The market's positive response to Meta's earnings report is a bellwether for AI stocks," she said. "If a company can show strong results from its core business, its investments in AI will be seen more positively, but if the core business is showing any sign of weakness, as we saw last week with Alphabet's YouTube, then the stock may seem more risky." Meta's latest big achievement in AI was the release last week of a new version of its popular Llama large language model. The new Llama 3.1 release consisted of three variants, each of which is open-source and free for any developer to use. The largest of the three comes with 405 billion parameters, making it one of the largest-ever LLMs. Meta's stock had already gained an impressive 34% in the year to date, prior to today's report, almost double the gains of the tech-heavy Nasdaq index.

Spending takes center stage in Meta Platform's earnings report after the bell Wednesday

This month's pullback in technology stocks puts the pressure on Meta Platforms to wow investors when it reports results, and prove that its ambitious AI visions are worth the steep investment. Analysts expect the social media giant to earn $4.73 per share on $38.3 billion in revenue when it reports second-quarter results after the bell Wednesday. More important to Wall Street is the company's capital expenditures -- or spending -- as investors are demanding to see clear signs that hefty investments in AI are beginning to pay off . META 1M mountain Meta shares this month The intensified attention toward AI spending comes on the heels of Alphabet's quarterly print and during a "make-or-break" week with earnings from four tech behemoths. While Alphabet topped Wall Street estimates, its rising expenses spurred a sell-off across the sector. Meta's shares are already down more than 6% in July, with a more than 2% slide last week. There is a silver lining. Wolfe Research's Shweta Khajuria said Alphabet 's results may lower the bar for others, including Meta. Analysts polled by StreetAccount expect the company to tally $9.5 billion in capital expenditures for the period. For the year, the company expects capex of between $35 billion and $40 billion. Morgan Stanley analyst Brian Nowak said capex will continue to "meaningfully" accelerate into 2025 and 2026 if the social media giant shows better engagement and revenue from the new projects. Industry discussions already suggest an uptick in Reels engagement. "Even without these green shoots, we still see a path toward ~$29 of base case [free cash flow] in '26," he wrote. Earlier this month, Raymond James analyst Josh Beck raised his 2025 capex estimates to $50 billion as the company builds out Llama, its updated large language models. But Beck also sees Meta shares going higher as he raised his price target to $600. Wells Fargo analyst Ken Gawrelski expects the earnings report help investors get a better sense of the company's outlook. "CapEx uncertainty likely remains, but post 2Q call investors should feel more constructive on '25 revenue and margins," he wrote. An uptick in advertising Wall Street is also keeping an eye on advertising figures this quarter, with Nowak viewing Meta as best situated to weather any uncertainty. "Through the noise, 2Q data signals revenue strength tied to higher Temu global ad spend (+ > 100%Y/Y), while return of media and tech ad spend should benefit Meta," added Bernstein's Mark Shmulik. META YTD mountain Share performance this year The upcoming election and Olympics in Paris could prove a tailwind for the company by boosting cost-per-minute figures, said Deutsche Bank's Benjamin Black. This setup underpins his confidence in the company reporting near the "high-end" of its second-quarter forecast. A potential TikTok ban in the new year could also bode well for advertising, added Bank of America's Justin Post. "We remain positive on Meta & thing Reels, Messaging, & AI drive ad improvements are still early, and could lead to positive product surprises & revenue upside," he wrote.

Meta Platforms' ad sales, AI investment in focus during Q2 earnings (NASDAQ:META)

Meta Platforms (NASDAQ:META) is set to report its second quarter results on Wednesday, with investors focusing on the social media giant's advertising sales growth along with updates on increased costs for AI roadmap. Wall Street expects the Menlo Park, California-based company to post EPS $4.78 on revenue of $38.31 billion, implying a rise of 19.7% during the quarter. Earlier in April, investors were disappointed as Meta's guidance came in on the light side and the company's forecast for increased capital expenditures to support its AI infrastructure drew attention, leading to the stock falling 12% in early reaction to first-quarter earnings. The Facebook parent's shares fell nearly 6% since its first quarter results. Still, the stock grew over 30% since the start of the year, outperforming the 14% rise in the broader S&P500 Index. Last week, following Alphabet's results, Meta and Snap shares went down over 4%, as investors were worried about a softening ad market. However, BofA analysts expect Meta's Q2 revenue at the upper end of the guide & meet/beat Street estimates, with lower-than-expected ad revenue deceleration in Q2, driven by improved advertiser sentiment and the inclusion of GenAI tools for better performance. "We remain positive on Meta & think Reels, Messaging, & AI driven ad improvements are still early, and could lead to positive product surprises & revenue upside," said BofA analyst Justin Post, adding that the brokerage doesn't anticipate a repeat of last quarter's higher '24 expense guidance, though higher legal & capex are risks. BofA estimates Q2 capex of $9.2B and free cash flow of $11.5B, while it expects Q3 revenue to be $39.5B, with growth decelerating 5pts to 16% year-over-year. During Meta's earnings call, investors would also want to focus on the outlook for capital expenditure and hear comments highlighting the return on AI investment. Seeking Alpha analysts and Wall Street are bullish and rated the stock a Buy. A recent Seeking Alpha analysis pointed out that given the company's robust open-source strategy, AI advancements, and potential for exceeding growth expectations, Meta's shares remain a Strong Buy going into earnings. Meanwhile, Seeking Alpha's Quant rating are cautious and consider the stock a Hold, dragged down by its valuation factor. Over the last three months, EPS estimates have seen 11 upward revisions and four downward revisions, while revenue estimates have seen 15 upward revisions versus five downward moves. More on Meta Platforms Meta Q2 Earnings Preview: Best AI Stock Meta Platforms Q2 Earnings: An AI Dud Could Send Shares Crashing (Rating Downgrade) Meta's Open-Source AI Strategy Means It Could Develop AGI First Meta AI data centers hold about 600,000 Nvidia H100 GPUs: SIGGRAPH 2024

Meta shares rise as earnings top expectations

San Francisco (AFP) - Meta on Wednesday reported profit of $13.5 billion in the recently ended quarter, beating market expectations and causing its share price to jump. Meta, the parent company of Facebook and Instagram, said revenue in the quarter was $39 billion, some 22 percent higher than the same period a year earlier. "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," said Meta founder and chief Mark Zuckerberg. Meta shares rose more than four percent to $495.30 in after-market trade that followed the release of the earnings figures. The impressive profit came even though Meta's Reality Labs unit, devoted to virtual and augmented reality products, lost $4.5 billion, which was more than analysts expected. Meta costs overall rose seven percent to $24.22 billion when compared with the same period a year earlier as it races against Microsoft, Google and other tech firms to be a leader in artificial intelligence. "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," Zuckerberg said. Zuckerberg has become an unexpected evangelist for open source technology when it comes to developing artificial intelligence, pitting him against OpenAI and Google. The 40-year-old tech tycoon recently laid out his vision in an open letter titled "Open Source AI is the Path Forward." Meta reported that an average of 3.27 billion people used at least one of the Silicon Valley giant's family of apps that include WhatsApp, Instagram, and Facebook. Meta said ad views in the quarter were 10 percent more than during the same period last year, and the average price of ads was up a similar percentage. "Any apprehensions investors may have had about Meta's spending on AI and the metaverse are likely to be allayed by this quarter's results," said eMarketer principal analyst Max Willens. "Meta's careful introduction of ads on Reels has led to a perfect storm of rising impressions and rising ad prices." Willens added that Meta investors should feel comfortable with the company's "vigorous investments in its plans for the future." Reels is an algorithm-fueled short video sharing service Meta launched in a challenge to TikTok, which faces the potential of being banned in the United States under a new law poised to take effect. In another potential boost to its business, by the end of the year, Meta could also start selling advertising on Threads, its text message platform similar to X (formerly Twitter). The rise in sales and profit continued Meta's rebound of 2023, which came thanks to drastic cost-cutting, including massive layoffs in what Zuckerberg dubbed the "year of efficiency" that saw tens of thousands of employees let go after a miserable 2022. Meta said its global workforce now stood at 70,799, trimmed from last quarter and down from a peak of more than 87,000 employees in 2022. Zuckerberg has urged investors to be patient as his company made its move into AI, acknowledging that unrolling new products before they made money had "historically seen a lot of volatility in our stock."

Mark Zuckerberg says Meta's AI tool is on pace to be the 'most used' in the world

Meta Platforms Inc. reported stronger-than-expected results for the second quarter on Wednesday, sending shares sharply higher in after-hours trading. While it didn't say how much it expects to spend on AI next year, the company made it clear it would be significant. The prospect of soaring expenses can often spook investors, but analysts said Meta's latest results show it can afford it, at least for now. "The market's positive response to Meta's earnings report is a bellwether for AI stocks. If a company can show strong results from its core business, its investments in AI will be seen more positively. If the core business is showing any sign of weakness -- as we saw last week with Alphabet's YouTube -- then the stock may seem more risky," said Debra Aho Williamson founder and chief analyst at Sonata Insights. She added that Meta stands out from other tech companies with AI ambitions because it already brings in a "massive amount" of advertising revenue -- rather than trying to build a new business from scratch. "And unlike Google, which is grappling with making changes that will impact its core ad business, most of Meta's AI investments are either aimed at making advertising on its properties work better or at building new features that could eventually become revenue drivers," Williamson said. The Menlo Park, California-based company earned $13.47 billion, or $5.16 per share, in the April-June period. That's 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, were expecting earnings of $4.72 per share on revenue of $38.26 billion, according to a poll by FactSet. "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," said CEO Mark Zuckerberg in a statement. During a conference call with analysts, Zuckerberg said Meta is in a "fortunate position" where strong results give it the opportunity to invest in the future. The number of daily active users for Meta's family of apps -- Facebook, Instagram, WhatsApp and Messenger -- was 3.27 billion for June, an increase of 7% from a year earlier. The company no longer breaks out user figures for Facebook as it had in the past. The company did disclose recently that WhatsApp has reached more than 100 million monthly users in the U.S. and Zuckerberg said that Threads, Meta's X rival, is about to hit more than 200 million monthly users. Meta said it expects its third-quarter revenue to land in the range of $38.5 billion to $41 billion. Analysts are expecting $39.1 billion. The company hasn't given guidance for 2025 yet -- it said it will do so during its fourth-quarter earnings call -- but it expects infrastructure costs to be a "significant driver of expense growth" in the coming year. Like other big tech companies, Meta is investing heavily in building its artificial intelligence capacity, including in data centers, and expects "significant capital expenditures growth in 2025 as we invest to support our artificial intelligence research and product development efforts." Meta is in a good position to grow "at a much faster pace than the competition in both the AI and ad spaces going forward," said Thomas Monteiro, senior analyst at Investing.com. "That's because Zuckerberg's company keeps showing signs that it is able to keep growing at the 20%+ per quarter level in a much more efficient way than other big tech peers, such as Alphabet and Microsoft, for example; which are not only struggling to keep revenue growth in the double digits, but also are progressively taking a bigger hit on the margins side," he added. Monteiro added that Meta's strategy of focusing its growth on younger users outside of the U.S. appears to be paying off, though the numbers "would have been even better" were it not for its Reality Labs segment dragging revenue lower.

Meta Platforms Q2 Earnings Preview: AI In Focus As 'Advertisers Spend On The Best Digital Channels -- Including Meta,' Analyst Says - Meta Platforms (NASDAQ:META)

Advertising revenue and artificial intelligence growth are two items analysts are watching in Q2 results. Artificial intelligence progress and advertising spending are among the topics analysts and investors are eyeing when Meta Platforms META reports second-quarter financial results after market close Wednesday, July 31. Earnings Estimates: Analysts estimate Meta Platforms will report second-quarter revenue of $38.3 billion according to data from Benzinga Pro. The company reported revenue of $32.0 billion in last year's second quarter. Meta Platforms has beaten analysts' revenue estimates in seven straight quarter sand eight of the last 10 quarters. Analysts estimate Meta will report second-quarter earnings per share of $4.73, compared to $2.98 reported in last year's second quarter. The company beat analysts' estimates for earnings per share in five straight quarters and six of the last 10 quarters. Guidance from Meta Platforms calls for revenue to be in a range of $36.5 billion to $39 billion. Read Also: Mark Zuckerberg Drops F-Bomb While Talking With Nvidia CEO: 'There Goes Our Broadcast Opportunity' What Analysts Are Saying: Investor sentiment for Meta is mixed, RBC Capital analyst Brad Erickson writes. The analyst, who has an Outperform rating and $570 price target said the risk/reward on Meta stock is slightly favorable. "Sentiment has been a whipsaw over the past month where we're finding more now leaning positive near term at current levels while still maintaining relative skepticism beyond the quarter," Erickson said. Erickson said small business marketing checks show constructive advertising spending trends for the second and third quarters. "We believe that despite a somewhat marginally softer consumer combined with evidence of worsening KPIs, advertisers continue to spend on the best digital channels which includes META." The analyst said Meta's ad platform and new AI tools are performing well. This could lead to increased capture rates and advertising revenue. Outside of advertising, Erickson said Meta's artificial intelligence strategy is a key from the earnings report. "The Street will be looking for more on the bigger picture AI monetization strategy where last quarter's performance by management was more challenging." Here are other recent analyst ratings for Meta Platforms and their price targets: Needham: Reiterated Underperform rating, no price target Benchmark: Reiterated Hold rating, no price target Wedbush: Reiterated Outperform rating, $570 price target Bernstein: Maintained Outperform rating, raised price target from $565 to $575 Oppenheimer: Maintained Outperform, raised price target from $500 to $525 Wolfe Research: Initiated with Outperform rating, $620 price target TD Cowen: Maintained Buy rating, raised price target from $530 to $600 Wells Fargo: Maintained Overweight rating, raised price target from $593 to $625 Key Items to Watch: AI will likely be a key item for investors and analysts. Meta CEO Mark Zuckerberg recently unveiled the rollout of an AI Studio where creators can make custom AI chatbots for social media profiles. Job cuts and spending could be another topic that could impact the stock price. In the first quarter, Meta raised its guidance for full-year 2024 expected expenses to a range of $96 billion to $99 billion. Higher infrastructure and legal costs were cited as the reason for the change from a range of $94 billion to $99 billion. Any further raises to expenses could spook some investors away from the stock. Meta walks a cautious line of investing in future growth like its AI roadmap and also not spending too much. Mentioned above by Erickson, advertising rates are a key for the quarter. Meta reported ad impressions were up 20% year-over-year in the first quarter with the average price per ad up 6% year-over-year. Investors will likely want to see continued momentum and year-over-year increases for both metrics. META Price Action: Meta Platforms shares trade at $467.50 versus a 52-week trading range of $274.38 to $542.81. Meta stock is up 47% over the last year and up 32% year-to-date in 2024. Read Next: Senate Set To Approve New Child Online Safety Bill On Tuesday: What It Means For Elon Musk's X, Meta, Snap And TikTok Market News and Data brought to you by Benzinga APIs

Meta set to report second-quarter earnings after the bell

Meta founder and CEO Mark Zuckerberg speaks during the Meta Connect event at Meta headquarters in Menlo Park, California, on Sept. 27, 2023. Meta is slated to report second-quarter earnings on Wednesday after the close of regular trading. Here's what analysts polled by LSEG are expecting: Wall Street is expecting sales growth of 20% from $32 billion a year earlier, as Meta's business continues to recover from a brutal 2022, when a difficult economy led advertisers to slash spending. Meta's ad revenue is projected to show an increase of 19% to $37.6 billion, according to StreetAccount. While the company's core ad unit has been the primary driver of the stock, investors are increasingly focused on Meta's hefty spending on artificial intelligence and the metaverse. Like other tech giants, Meta has been pouring money into data center infrastructure and computing resources needed to train AI models and run massive workloads. CEO Mark Zuckerberg acknowledged last week that Meta and its peers may be overspending on their AI buildouts, but said they have little choice if they want to be positioned for future growth. "The downside of being behind is that you're out of position for like the most important technology for the next 10 to 15 years," Zuckerberg said on a podcast with Bloomberg's Emily Chang, echoing similar comments from Alphabet CEO Sundar Pichai on his company's earnings call last week. In April, Meta said its 2024 capital expenditures would be in the range of $35 billion to $40 billion, which was higher than the company's prior forecast of $30 billion to $37 billion. Earlier this year, Zuckerberg said Meta's computing infrastructure will include 350,000 Nvidia H100 graphics cards, the expensive computer chips used to train so-called large language models and related AI software, by the end of 2024. Additionally, Zuckerberg said at the time that Meta's computing infrastructure would contain "almost 600k H100 equivalents of compute if you include other GPUs," which equates to billions of dollars of spending. Regarding Google's AI investments, Pichai told analysts last week that "When we go through a curve like this, the risk of underinvesting is dramatically greater than the risk of overinvesting for us here." As part of Meta's AI push, the company debuted last week the latest version of its Llama AI model, which consists of three different variants that developers can access and use for free, underscoring Meta's efforts to ensure that its AI technology is on par with OpenAI and Google. Heading into Meta's report on Wednesday, the digital ad market has shown some signs of weakness. Alphabet reported lower-than-expected ad revenue out of YouTube last week, and on Tuesday, Pinterest issued disappointing third-quarter guidance, leading to a 15% plunge in the stock after hours. Pinterest finance chief Julia Brau Donnelly told analysts on an earnings call that while the technology, autos and financial services sectors were "sources of strength" for the company's ad business, growth in those areas "was partially offset by softness within specifically food and beverage advertisers, who are navigating broader headwinds within that category." Meta's Reality Labs division, which houses its metaverse technologies, is still bleeding cash. Analysts expect the unit to record an operating loss of $4.55 billion, according to StreetAccount. That would bring its total losses since late 2020 to roughly $50 billion. Revenue in the unit is expected to show an increase of 34% from a year earlier to $371 million, mostly from Quest VR headsets and smart glasses.

Meta beats forecasts on strong ad sales, reassures on AI costs

STORY: Facebook-owner Meta Platforms beat forecasts over the second quarter, and reckons the coming months could be even better. Revenue jumped 22% to just over $39 billion, exceeding expectations. The firm credited strong ad sales. It also said it was seeing the benefits of a project using AI to better target and deliver advertising. Like rivals, Meta is investing heavily in the technology. But it left its total expense forecast for the year unchanged at up to $99 billion. Meta's previous enthusiasm for the metaverse is working out less well. Losses at its Reality Labs unit, which makes VR headsets and smart glasses, widened to almost $4.5 billion. And the company says that number is set to "increase meaningfully" in the months ahead. Overall, however, Meta is feeling bullish. It now forecasts a third-quarter revenue range that is ahead of analyst estimates. The robust outlook saw Meta shares rise close to 7% in U.S. after-hours trade. It also boosted ad-reliant social media peers like Snap, which gained 3%.

Meta's advertising growth is proof that hefty AI spending is already paying off

Mark Zuckerberg, chief executive officer of Meta Platforms Inc., during an interview on "The Circuit with Emily Chang" at Meta headquarters in Menlo Park, California, US, on Thursday, July 18, 2024. For investors who are skeptical of Meta's massive spending on artificial intelligence and whether it will pay off anytime soon, CEO Mark Zuckerberg is urging them to look to the present. After the company's better-than-expected second-quarter earnings report on Wednesday, Zuckerberg and finance chief Susan Li rattled off all the ways that AI has helped the company grow faster than the competition in the digital advertising market, Meta's core business. "The ways that it's improving recommendations and helping people find better content, as well as making the advertising experiences more effective, I think there's a lot of upside there," Zuckerberg said on the earnings call. "Those are already products that are at scale. The AI work that we're doing is going to improve that." Meta reported revenue growth of 22% from a year earlier to $39.07 billion, with 98% of its sales coming from advertising, primarily on Facebook and Instagram. Its growth rate was double that of Google's ad business, which saw sales increase 11% to $64.6 billion, Alphabet said in its earnings report last week. Meanwhile, Pinterest and Spotify, which are both significantly smaller than Meta, reported revenue growth of 21% and 20%, respectively, in their latest reports. As in previous quarters, Li said Meta's advertising business benefited from online commerce, gaming and the media and entertainment sectors, and that ad growth continued to be strongest in the Asia-Pacific region. She said the company's "improved ad performance" helped lift overall ad prices despite slowing growth in that region. Zuckerberg pointed to AI as the foundation behind Meta's refreshed online advertising platform, which was battered after Apple introduced an iOS privacy update in 2021 that made it harder for social media companies to target users across the Internet.

Meta Earnings Preview: Can Traditional Revenue Streams Offset Huge AI Expenses? | Investing.com UK

This unexpected downturn underscores the market's volatility and the potential for even the most established companies to falter eventually. All eyes are now on Meta (NASDAQ:META), whose second-quarter earnings are due after the market closes today. Given the intense focus on artificial intelligence, investors will keenly watch the social media giant's progress in this domain. Meta has made substantial investments in AI, acquiring around 600,000 H100 GPUs from Nvidia. However, the company's core revenue streams still primarily rely on its traditional platforms like Instagram, Reels, Facebook, and Messenger. It will be crucial for Meta to demonstrate how its AI endeavors are translating into tangible value and revenue growth. Last week, the company behind Facebook, Instagram, and WhatsApp launched the latest update to its flagship AI product, Llama, now available as the free and open-source version 3.1 405B. This move allows anyone to access and modify the model, potentially accelerating Meta's AI development. Unlike the closed models used by Google, OpenAI, and Anthropic, Meta's open-source approach reflects CEO Mark Zuckerberg's strategic gamble. Jefferies analysts believe Meta's choice to adopt an open-source model positions the company ahead of its competitors in creating value and reinforcing its AI leadership. They liken Meta's strategy to the success of Linux, suggesting that Llama could become a foundational element for future AI software. "In addition to offering a significantly better cost/performance ratio than closed models, the open-source nature of the 405B model will make it the best choice for fine-tuning and distillation of smaller models," Zuckerberg explained during the recent update announcement. While closed models from other Big Tech companies currently dominate, open source is quickly catching up. According to Zuckerberg, Llama 2 lagged behind state-of-the-art models last year, but Llama 3 now competes with the most advanced models and excels in some areas. He predicts future Llama versions will lead the industry in technology, transparency, modifiability, and cost efficiency. However, training AI models is expensive and requires substantial electricity, prompting Meta to seek new revenue sources to sustain its open-source approach. Jefferies analysts see several opportunities for Meta to monetize Llama: Meta's innovative approach could redefine its position in the AI landscape, driving both technological advancement and financial growth. As Meta prepares to release its quarterly earnings after the market closes, analysts anticipate a positive performance. According to InvestingPro, markets expect Meta's earnings per share (EPS) to rise from $4.71 in the previous quarter to $4.78. Profits are projected to reach $38.31 billion, marking a 5.1% increase from the $36.445 billion reported in the first quarter and a 19.7% increase compared to the same period in 2023. Sentiment remains positive, with 11 upward revisions on EPS and only 4 downward ones in the last 90 days. Understanding when Meta's significant investments will become profitable is crucial for market confidence. Despite turning a corner after its Metaverse bet and exceeding earnings expectations for the past five quarters, Meta's stock slid 15% following the last earnings call. Investors were concerned about the high capital expenditures, which are projected to be between $35 billion and $40 billion, with some sectors yet to monetize these investments. In today's fast-paced, social media-driven world, there's a heightened demand for instant results. Mark Zuckerberg faces the challenge of meeting these expectations. However, those who understand the value of patience believe time will reveal whether Meta's substantial AI investments are wise or overly risky. In the meantime, small investors should diversify their portfolios to prepare for potential market shifts, even as industry giants navigate their ambitious growth strategies. *** Tired of watching the big players rake in profits while you're left on the sidelines? InvestingPro's revolutionary AI tool, ProPicks, puts the power of Wall Street's secret weapon - AI-powered stock selection - at YOUR fingertips! Don't miss this limited-time offer. Subscribe to InvestingPro today and take your investing game to the next level!

Meta Q2 ad sales expected to rise; focus on AI roadmap, costs

Alphabet's warning last week that capital expenses would stay high this year, overshadowed a jump in ad sales and pushed its stock down. Meta is betting on an open-source approach for its generative AI push. The company released its mostly free Llama 3.1 artificial intelligence model last week, and said developers can use and modify its AI models free of charge. It has burnished its ad-buying products with AI tools and introduced new AI features such as a chat assistant to drive engagement on its social media properties. On Monday, it said it would roll out a new tool called AI Studio that would allow users to create, share and design personalized AI chatbots. "We are bullish on Meta's position as a key pillar of open-source AI," Jefferies analysts said, adding that the company could potentially unlock new revenue streams by licensing its AI models or creating AI apps. Meta shares have risen 32% this year, compared with a near 16% rise in the tech-heavy Nasdaq Composite index. The company will also need to show its bread and butter ad business is thriving when it reports second-quarter results on Wednesday. GroupM, one of the world's largest media buying firms, raised its 2024 global advertising growth forecast to 7.8% in June, from 5.3% in December, which augurs well for Meta. Smaller ad-dependent companies Pinterest and Snap are scheduled to report results on Tuesday and Thursday, respectively. "We remain positive on Meta and think Reels, Messaging and AI-driven ad improvements are still early, and could lead to positive product surprises and revenue upside," analysts at BofA Securities said. "With political spend, and potential TikTok ban in 1Q'25, Meta could also see an ad spend benefit in 2H'24." (Reporting by Yuvraj Malik in Bengaluru; Editing by Sayantani Ghosh and Shounak Dasgupta)

What You Need To Know Ahead of Meta's Earnings Report

UPDATE -- July 30, 2024: This article has been updated to reflect more recent analyst estimates and share price information. Meta Platforms (META) is set to report second-quarter earnings after the closing bell on Wednesday, with investors watching for advertising revenue strength and updates on artificial intelligence (AI) plans after its most recent AI model announcement. The Facebook and Instagram parent is expected to report revenue of $38.37 billion, according to estimates compiled by Visible Alpha, about a 20% rise from a year ago. Net income is projected to be $12.32 billion or $4.71 per share, up from $7.79 billion or $2.98 per share in the year-ago quarter.

Meta: Instagram and Facebook ads help drive profit surge

On Wednesday, Meta founder and chief executive Mark Zuckerberg said that it had seen a "strong" quarter and suggested that its AI system is "on track to be the most used AI assistant in the world by the end of the year". Meta has been spending huge amounts on AI as well as augmented and virtual reality products such as its headsets which let users "jump into" their favourite games or exercise classes. The reported profit came despite its Reality Labs unit which develops such products losing $4.5bn - more than analysts had expected. Mr Zuckerberg and other tech executives at the likes of Google, Microsoft and OpenAI have been locked in a battle to create powerful AI tools Meta warned on Wednesday it expects to spend as much as $40bn this year on developing AI products and that higher spending would continue in 2025. "Any apprehensions investors may have had about Meta's spending on AI and the metaverse are likely to be allayed by this quarter's results," suggested eMarketer principal analyst Max Willens. "Meta's careful introduction of ads on Reels has led to a perfect storm of rising impressions and rising ad prices." Reels is a short video sharing service Meta introduced in a bid to challenge TikTok, which faces a potential ban in the US under a new law poised to take effect. Meanwhile, analyst Mike Prolux said Meta was "well positioned" to deliver on AI tools. He pointed out, however, that while the Facebook and Instagram parent company may "boast" about its AI assistant becoming the most used in the world, users of Instagram, Messenger and WhatsApp must use it because it provides the search bar on those apps. "In a way it's a smart move by the company to, effectively, introduce Meta AI to its users by forcing them to use it," he said. While the company has been spending huge amounts on AI and Metaverse developments, pushed on by Mr Zuckerberg himself, it has been looking to cut costs elsewhere and has cut thousands of posts. Meta said its global workforce now stood at 70,799, down from a peak of more than 87,000 employees in 2022. In a call following the earnings update on Wednesday though, its chief financial officer Susan Li said at the end of 2024 its headcount would be "meaningfully higher" when compared with the year before.

'Potential boost from TikTok uncertainty': Here's what Wall Street expects from Meta's 2nd-quarter earnings

This story is available exclusively to Business Insider subscribers. Become an Insider and start reading now. Have an account? Log in. And it will be vying to prove to investors that its massive investment in AI chips is worth it, as the company has shown little progress so far in monetizing its massive investment. Here's what Wall Street expects from Meta's second-quarter earnings report. Bank of America said in a recent note that it expects Meta to meet or slightly beat Wall Street's expectations for revenue and beat profit estimates when it reports second-quarter earnings. "With job openings down in 2Q, we don't anticipate a repeat of last quarter's higher '24 expense guidance, though higher legal and capex are risks," Bank of America analyst Justin Post said. Looking forward, Post highlighted that a potential TikTok ban in early 2025 could provide a big boost to Meta's advertising business. "With political spend, and potential TikTok ban in 1Q'25, Meta could also see an ad spend benefit in 2H'24," Post said. Bank of America has a "Buy" rating on Meta with a $550 price target. A solid advertising environment should help Meta deliver better-than-expected second-quarter earnings and revenue, according to a recent note from Citi. "Our 2Q advertising checks and time at Cannes suggest that the broader online advertising market is healthy and strengthening," Citi analyst Ronald Josey said. "We'll be watching for continued engagement benefits from Meta's investments in AI content discovery, adoption of newer monetization tools, early progress from the beta launch of AI studio, potential benefits from Llama 3.1, and profitability. Meta remains our top-pick across our coverage," Josey said. Citi has a "Buy" rating on Meta with a $550 price target. Wells Fargo raised its second-quarter estimates in a recent note as its internal checks suggests solid ad performance from the company. "Checks suggest noticeable ad targeting and efficiency improvement in 2Q despite meaningful CPM growth acceleration," Wells Fargo analyst Ken Gawrelski said. The bank also expects Meta to maintain its prior capital expenditures guidance of $35 billion to $40 billion for the year. "Given the unfavorable market reaction to 1Q mgmt commentary on potential revenue displacement due to scaling of newer AI products, believe investors will welcome further framing of potential impact," Gawrelski said. Wells Fargo has an "Overweight" rating on Meta with a $625 price target. Mizuho said in a recent note that investor concerns about Meta's massive investment cycle has kept Wall Street expectations "in check." But that means overall expectations may prove to be too conservative. "We believe risk/reward appears positive on Meta into the print with solid 2Q24 ad agency tracking, achievable 3Q24 expectations, and flexibility in opex to manage raising capex," Mizuho analyst James Lee said. "At the same time, we view consensus FY24 growth of 17% conservative with improved ad pricing growth from Reels, Amazon's integration into FB shops, and special events revenue growth," Lee added. Mizuho has an "Outperform" rating on Meta with a $575 price target. The upcoming Presidential election and its related advertising spend should benefit Meta in a big away, according to Bloomberg Intelligence analyst Mandeep Singh. "Meta's impressions and user growth may taper with ad pricing and election-ad spending to be key drivers for surpassing consensus sales growth expectations of 20% in 2Q," Singh said in a recent note. The company also has the potential to offer guidance on the monetization potential of its licensing of Llama, its open-source large language model. "Though Meta's positioning remains strong in gen AI, a top-line lift from licensing its Llama model to enterprise customers and adoption of subscription chatbot offerings, similar to OpenAI and Gemini Advanced, will be a key focus on the earnings call," Singh said.

'Potential boost from TikTok uncertainty': Here's what Wall Street expects from Meta's 2nd-quarter earnings | Business Insider India

All eyes are on Meta Platforms with the company set to report its second-quarter earnings results after the market close on Wednesday. The social media giant has a lot to prove to investors, especially after its first-quarter earnings led to a one-day decline of 11% in April. While Meta has built up its AI capabilities in a big way, having hoarded about 600,000 H100 GPUs from Nvidia, it's main driver of earnings remains its product platforms including Instagram, Reels, Facebook, and Messenger. And it will be vying to prove to investors that its massive investment in AI chips is worth it, as the company has shown little progress so far in monetizing its massive investment. Here's what Wall Street expects from Meta's second-quarter earnings report. Bank of America: 'Potential TikTok ban' bodes well Bank of America said in a recent note that it expects Meta to meet or slightly beat Wall Street's expectations for revenue and beat profit estimates when it reports second-quarter earnings. "With job openings down in 2Q, we don't anticipate a repeat of last quarter's higher '24 expense guidance, though higher legal and capex are risks," Bank of America analyst Justin Post said. Looking forward, Post highlighted that a potential TikTok ban in early 2025 could provide a big boost to Meta's advertising business. "With political spend, and potential TikTok ban in 1Q'25, Meta could also see an ad spend benefit in 2H'24," Post said. Bank of America has a "Buy" rating on Meta with a $550 price target. Citi: 'Focused on engagement, monetization, and efficiency gains' A solid advertising environment should help Meta deliver better-than-expected second-quarter earnings and revenue, according to a recent note from Citi. "Our 2Q advertising checks and time at Cannes suggest that the broader online advertising market is healthy and strengthening," Citi analyst Ronald Josey said. "We'll be watching for continued engagement benefits from Meta's investments in AI content discovery, adoption of newer monetization tools, early progress from the beta launch of AI studio, potential benefits from Llama 3.1, and profitability. Meta remains our top-pick across our coverage," Josey said. Citi has a "Buy" rating on Meta with a $550 price target. Wells Fargo: 'Checks suggest robust 2Q ads performance' Wells Fargo raised its second-quarter estimates in a recent note as its internal checks suggests solid ad performance from the company. "Checks suggest noticeable ad targeting and efficiency improvement in 2Q despite meaningful CPM growth acceleration," Wells Fargo analyst Ken Gawrelski said. The bank also expects Meta to maintain its prior capital expenditures guidance of $35 billion to $40 billion for the year. "Given the unfavorable market reaction to 1Q mgmt commentary on potential revenue displacement due to scaling of newer AI products, believe investors will welcome further framing of potential impact," Gawrelski said. Wells Fargo has an "Overweight" rating on Meta with a $625 price target. Mizuho: 'Capex concerns keep expectations in check' Mizuho said in a recent note that investor concerns about Meta's massive investment cycle has kept Wall Street expectations "in check." But that means overall expectations may prove to be too conservative. "We believe risk/reward appears positive on Meta into the print with solid 2Q24 ad agency tracking, achievable 3Q24 expectations, and flexibility in opex to manage raising capex," Mizuho analyst James Lee said. "At the same time, we view consensus FY24 growth of 17% conservative with improved ad pricing growth from Reels, Amazon's integration into FB shops, and special events revenue growth," Lee added. Mizuho has an "Outperform" rating on Meta with a $575 price target. Bloomberg Intelligence: 'Election-ad spending to be key driver' The upcoming Presidential election and its related advertising spend should benefit Meta in a big away, according to Bloomberg Intelligence analyst Mandeep Singh. "Meta's impressions and user growth may taper with ad pricing and election-ad spending to be key drivers for surpassing consensus sales growth expectations of 20% in 2Q," Singh said in a recent note. The company also has the potential to offer guidance on the monetization potential of its licensing of Llama, its open-source large language model. "Though Meta's positioning remains strong in gen AI, a top-line lift from licensing its Llama model to enterprise customers and adoption of subscription chatbot offerings, similar to OpenAI and Gemini Advanced, will be a key focus on the earnings call," Singh said.

What's Going On With Meta Platforms Stock Wednesday? - Meta Platforms (NASDAQ:META)

Meta is expected to report earnings of $4.73 per share and revenue of $38.311 billion. Meta Platforms Inc META shares are in the spotlight Wednesday ahead of earnings after the bell. Here's what you need to know before the report. What To Know: Meta is due to report financial results for the second quarter after the market close on Wednesday. The company is expected to report earnings of $4.73 per share and revenue of $38.311 billion, according to Benzinga Pro. Meta has exceeded analyst estimates on the top and bottom lines in five consecutive quarters heading into Wednesday's print. Last quarter, Meta reported revenue of $36.45 billion, up 27% year-over-year, and earnings of $4.71 per share. Family Daily Active People were up 7% in the first quarter. Ad impressions jumped 20% year-over-year. "The new version of Meta AI with Llama 3 is another step towards building the world's leading AI. We're seeing healthy growth across our apps and we continue making steady progress building the metaverse as well." Meta CEO Mark Zuckerberg said at the time. AI will be in focus when Meta reports after the bell. RBC Capital analyst Brad Erickson recently said that AI tools appear to be performing well, which could lead to increased capture rates and advertising revenue in the quarter. "The Street will be looking for more on the bigger picture AI monetization strategy where last quarter's performance by management was more challenging," Erickson said. Related Link: Meta Faces Slight Selling Pressure Ahead Of Q2 Earnings: Bearish Charts Suggest 20% Upside Potential Here's a look at other recent analyst updates leading up to earnings: JMP Securities analyst Andrew Boone reiterated Meta with a Market Outperform and price target of $525. Needham analyst Laura Martin reiterated Meta with an Underperform rating. Benchmark analyst Mark Zgutowicz reiterated Meta with a Hold. Wedbush analyst Scott Devitt reiterated Meta with an Outperform and maintained a price target of $570. Bernstein analyst Mark Shmulik maintained Meta with an Outperform and raised the price target from $565 to $575. Oppenheimer analyst Jason Helfstein maintained Meta with an Outperform and raised the price target from $500 to $525. META Price Action: Meta shares were up 2.19% at $473.32 at the time of publication, according to Benzinga Pro. Photo: Shutterstock. Market News and Data brought to you by Benzinga APIs

Meta Investors Have Laser-Focus on Capex After Microsoft Letdown

Meta Platforms Inc. investors will be hoping it can do a better job than Microsoft Corp. and Alphabet Inc. in convincing Wall Street that lofty spending on artificial intelligence will be worth it. Wall Street is taking a more skeptical view of how much is being spent on AI by tech firms and when it will start to pay off in terms of improved growth and profitability. The Facebook parent already irked investors in April by hiking its spending forecast above estimates. Microsoft shares slid on Wednesday after it reported slower growth in its cloud computing unit and said capital expenditures would increase again in the next fiscal year.