Meta's AI Investments Drive Strong Q2 Performance, Fueling Future Growth

Meta is playing the AI game with house money

Mark Zuckerberg's AI hiring spree is costing a lot of money. His investors don't care. Meta's stock price shot up over 10 percent on Wednesday after the company reported better-than-expected earnings. Revenue generated in the second quarter was $47.5 billion, up 22 percent from a year ago. Daily users across Facebook, Instagram, Threads, and WhatsApp grew to almost 3.5 billion. Meta also warned Wall Street that it would spend more on data centers and hiring next year. In response to all this, the company's valuation increased by over $175 billion, or more than 12 Scale AI deals.

Meta Gives Strong Third-Quarter Sales Forecast, Sees Higher 2025 CapEx On AI Spending

Meta Platforms Inc. topped projections for second-quarter sales and gave a stronger-than-expected forecast for the current period, a sign that the social media company's advertising business is still growing quickly enough to support aggressive spending on artificial intelligence. Meta lifted the low end of its forecast for 2025 capital expenditures as it continues to invest heavily in the talent, infrastructure, data centers and energy needed to compete in a fast-moving AI race. The company now expects to spend $66 billion to $72 billion this year. The projection was adjusted higher in April to account for ongoing trade disputes and AI investments. Bloomberg's Ed Ludlow and Kurt Wagner join Bloomberg Businessweek Daily to discuss. (Source: Bloomberg)

Meta Soars to Record as Growth Justifies Spending

Meta is increasing spending next year, with executives saying now is the time to seize on investment opportunities in artificial intelligence. Meta's strategy relies on its advertising business continuing to generate revenue, with Mark Zuckerberg saying the ads business is already seeing a "meaningful" amount of revenue from new generative AI features. Bloomberg Intelligence's Mandeep Singh writes that "Meta's Superintelligence initiative could be a significant driver of WhatsApp monetization, given its use by small businesses and advertisers for customer service. Investment in generative-AI infrastructure may improve recommendations and ad targeting for Reels ads, along with click-to-messaging advertising, which were key drivers of 9% ad-pricing growth in 2Q." Mandeep Singh, Senior Tech Industry Analyst at Bloomberg Intelligence, joins Tom Keene and Paul Sweeney on Bloomberg Surveillance. (Source: Bloomberg)

Meta growth driven by machine learning, not GenAI

Good old machine learning, not LLMs, are what's really paying for Zuck's genAI splurge Believe it or not, Meta's AI investments made a meaningful difference to its advertising business in Q2 -- it's just that those models aren't the kind that's got everyone, including the Social Network, plowing tens of billions of dollars a year into datacenters. It's going to be a few more years before the Zuckercorp's rampant spending on infrastructure and AI visionaries starts to bear fruit, CFO Susan Li reiterated on Wednesday's second quarter earnings call. "We don't expect that our genAI work is going to be a meaningful driver of revenue this year or next year," she said. For now, improvements in the more conventional machine learning models that power Meta's recommender systems are paying the bills. Broader deployment of the company's new AI-powered recommendation models drove a roughly five percent increase in ad conversions across Instagram and a three percent gain across Facebook, CEO Mark Zuckerberg touted in his prepared remarks on Wednesday. As their name suggests, these models are designed to boost engagement across the company's various platforms by connecting users to friends, posts, and other content. And in the last quarter, Zuck boasted improvements in these systems led to a five to six percent increase in time spent doomscrolling Facebook and Instagram. More importantly, these recommender models are how Meta makes money by sorting through tens or hundreds of thousands of potential ads to find the ones most likely to be relevant to individual users. This process is so important, in fact, that Meta has developed custom accelerators to ensure they run as quickly as possible. Going forward, Li and Zuckerberg say genAI will eventually play a bigger role in its advertising business. The Facebook parent is already using genAI to help users create advertising collateral, for example. "Nearly two million advertisers are now using our video generation features, image animation, and video expansion, and we're seeing strong results from our text generation tools," Li said. Li also revealed that Meta has begun incorporating large language models (LLMs) into the recommender systems used by Meta's X-competitor Threads. "LLMs are now driving a meaningful share of the ranking-related time spent gains on Threads," she said. Meta is toying with LLMs and other genAI tools in other areas as well. Zuck has previously teased an AI engineer designed to speed development of his Llama model herd. On Wednesday's call, he said teams had begun using Llama 4 to build autonomous AI agents to "improve the Facebook algorithm to increase quality and engagement." Speaking of the open weights models, Zuck said work on Llama 4.1, 4.2, and future models is ongoing, but stopped short of providing a concrete roadmap. All of this is "happening in low volume right now, so, I'm not sure that result, by itself, was a major contributor to this quarter's earnings... but I think the trajectory on this stuff is very optimistic," Zuckerberg added. For now, Meta is focused on building out the infrastructure necessary to fuel the development of new generative AI models by investing in infrastructure and talent. The company is currently in the process of building out a series of AI compute clusters, including a gigawatt scale facility called Prometheus set to come online in 2026 and another called Hyperion which Zuck boasts is will be the size of Manhattan and eventually scale to five gigawatts of capacity. Meta is also spending lavishly on eight-plus figure salaries as it works to build out its AI superintelligence team to build new systems that not just match human intelligence but exceed it. So, it's a good thing that Meta's old school ML is still paying the bills, as Li revealed that the compensation packages tied to these strategic hires will be the second largest driver in expense growth in 2026. "We really believe that this is the time for us to really make investments in the future of AI as I think it will open up new opportunities for us in addition to strengthening our core business," Li said. At least for the moment, Zuck's AI spending and superintelligence pipe dream aren't going to put Meta in the poor house just yet. In Q2, Meta's profits jumped 36 percent year over year to $18.3 billion on revenues of $47.5 billion. ®

Meta jumps on big revenue forecast beat, small capex raise

July 30 (Reuters) - Meta Platforms (META.O), opens new tab forecast third-quarter revenue well ahead of Wall Street expectations, and raised the lower end of its capital expenses forecast for the year, sending its shares up 10% in extended trading. For the third quarter, Meta said it expected total revenue of $47.5 billion to $50.5 billion, compared with analysts' average estimate of $46.17 billion, according to data compiled by LSEG. The company said in a statement that its third-quarter guidance assumed a 1% benefit from a weak dollar. Meta said while it was not providing an outlook for fourth-quarter revenue, the company expected the year-over-year growth rate in the period to be slower than in the third quarter. The social media giant raised the lower end of its annual capital expenditures forecast by $2 billion, driven by its high-stakes push for "superintelligence" in the heated AI race. The Facebook and Instagram parent now expects capital expenditures to be between $66 billion and $72 billion. Training and deploying advanced AI systems remain a capital-intensive endeavor, requiring costly hardware, massive computing resources and top-tier engineering talent. After a lackluster reception for its Llama 4 model that led to staff departures, Meta has tried to revitalize its AI push by sparking a high-stakes talent war that has seen it dole out more than $100 million pay packages to researchers from rival firms. CEO Mark Zuckerberg has pledged to spend hundreds of billions of dollars to build massive AI data centers, having shelled out $14.3 billion for a stake in startup Scale AI and poached its 28-year-old billionaire CEO Alexandr Wang. To fund the push, the billionaire founder is leaning on Meta's massive user base as well as AI-powered improvements in content engagement that make it a stable bet for advertisers even in times of economic uncertainty. The social media giant recently introduced an AI-driven image-to-video ad creation tool under its Advantage+ suite, allowing marketers to generate video ads from static images. Instagram, whose Reels product competes with ByteDance's TikTok and YouTube Shorts for ad dollars in the popular short video format, is set to account for more than half of Meta's ad revenue in the U.S. this year, according to research firm eMarketer. Meta has also accelerated efforts to monetize its social media platforms WhatsApp and Threads by integrating ads. The company last month named insider Connor Hayes as head of Threads, a sign it was moving the platform away from Instagram's shadow after leaning on the photo-sharing app for growth. Reporting by Echo Wang in New York, Kenrick Cai in San Francisco and Jaspreet Singh in Bengaluru; Editing by Tasim Zahid, Sayantani Ghosh and Matthew Lewis Our Standards: The Thomson Reuters Trust Principles., opens new tab * Suggested Topics: * Artificial Intelligence Echo Wang Thomson Reuters Echo Wang is a correspondent at Reuters covering U.S. equity capital markets, and the intersection of Chinese business in the U.S, breaking news from U.S. crackdown on TikTok and Grindr, to restrictions Chinese companies face in listing in New York. She was the Reuters' Reporter of the Year in 2020.

Meta narrows annual capital expenditures outlook for 'superintelligence' push, shares surge

July 30 (Reuters) - Meta Platforms (META.O), opens new tab narrowed its annual capital expenditures forecast on Wednesday, driven by the social media giant's high-stakes push for "superintelligence" in the heated AI race, sending its shares up nearly 9% in extended trading. The Facebook and Instagram parent now expects capital expenditures to be between $66 billion and $72 billion, compared with its prior projection of $64 billion and $72 billion. The move follows a similar announcement by Big Tech rival Alphabet (GOOGL.O), opens new tab, which last week raised its capital spending outlook by $10 billion to $85 billion on the back of strong AI-driven growth in its search and cloud businesses. Training and deploying advanced AI systems remain a capital-intensive endeavor, requiring costly hardware, massive computing resources and top-tier engineering talent. After a lackluster reception for its Llama 4 model that led to staff departures, Meta has tried to revitalize its AI push by sparking a high-stakes talent war that has seen it dole out more than $100 million pay packages to researchers from rival firms. CEO Mark Zuckerberg has pledged to spend hundreds of billions of dollars to build massive AI data centers, having shelled out $14.3 billion for a stake in startup Scale AI and poached its 28-year-old billionaire CEO Alexandr Wang. To fund the push, the billionaire founder is leaning on Meta's massive user base as well as AI-powered improvements in content engagement that make it a stable bet for advertisers even in times of economic uncertainty. The social media giant recently introduced an AI-driven image-to-video ad creation tool under its Advantage+ suite, allowing marketers to generate video ads from static images. Instagram, whose Reels product competes with ByteDance's TikTok and YouTube Shorts for ad dollars in the popular short video format, is set to account for more than half of Meta's ad revenue in the U.S. this year, according to research firm eMarketer. Meta has also accelerated efforts to monetize its social media platforms WhatsApp and Threads by integrating ads. The company last month named insider Connor Hayes as head of Threads, a sign it was moving the platform away from Instagram's shadow after leaning on the photo-sharing app for growth. Reporting by Jaspreet Singh in Bengaluru; Editing by Tasim Zahid Our Standards: The Thomson Reuters Trust Principles., opens new tab

Meta shares jump as AI fuels ad sales, outweighing big capital costs

July 30 (Reuters) - Meta Platforms (META.O), opens new tab forecast third-quarter revenue well above analysts' estimates on Wednesday, as artificial intelligence once more powered its core advertising business, sending its shares soaring 11% in extended trading. The bumper results could ease investor worries about the social media giant's frenzied pace of spending, at least for now, as it seeks to change Wall Street's impression that it lags rivals including Microsoft (MSFT.O), opens new tab and Alphabet's (GOOGL.O), opens new tab Google in the AI race. Meta raised the bottom end of its annual capital expenditures forecast by $2 billion, to a range of between $66 billion and $72 billion, as CEO Mark Zuckerberg told analysts on a call that AI was making big leaps possible in its business that makes money by selling ads on Facebook and Instagram. Rising costs to build out data center infrastructure and employee compensation costs - Meta has been poaching researchers with mega salaries - would push the 2026 expense growth rate above the pace in 2025, Meta said. The company is planning higher capital expenses next year as well. "I think there are all these questions that people have about what are going to be the timelines to get to really strong AI or superintelligence ... we've observed the more aggressive assumptions, or the fastest assumptions, have been the ones that have most accurately predicted what would happen. I think that that just continued to happen over the course of this year too," Zuckerberg said on a conference call with analysts. Investors have largely backed Zuckerberg's pursuit of superintelligence - a hypothetical concept where AI surpasses human intelligence in every possible way - pushing the company's stock up nearly a fifth so far this year. Meta's post-market stock gains on Wednesday, along with those of Microsoft's (MSFT.O), opens new tab, added a combined half a trillion dollars in stock market value. Microsoft said on Wednesday it expects capital expenditure to exceed $30 billion in its fiscal first quarter, far above analysts' estimate of $23.75 billion. At that pace, the company would spend roughly $120 billion on AI this fiscal year. The update came a week after Google parent Alphabet raised its capital spending plans for the year to about $85 billion and signaled more to come next year to meet surging demand for AI services. 'PUSH VERY AGGRESSIVELY' For the third quarter, Meta said it expected total revenue of $47.5 billion to $50.5 billion, compared with analysts' average estimate of $46.15 billion, according to data compiled by LSEG. Its third-quarter guidance assumed a 1% benefit from a weak dollar. It said year-over-year revenue growth in the fourth quarter would be slower than in the third quarter. "AI-driven investments into Meta's advertising business continue to pay off ... But Meta's exorbitant spending on its AI visions will continue to draw questions and scrutiny from investors who are eager to see returns," Emarketer senior analyst Minda Smiley said. She noted that the company's earnings "come against a backdrop of regulatory challenges that Meta faces in the U.S. and abroad, adding more uncertainty to its future." U.S. antitrust regulators have sued Meta to force it to restructure or sell Instagram and WhatsApp, claiming the company sought to monopolize the market for social media platforms used to share updates with friends and family. With court papers due in September, the judge overseeing the case is unlikely to rule until later this year at the earliest. Zuckerberg testified in April that the company was initially slow to recognize the competitive threat of TikTok, and that Meta has over the years tried to build many apps that never gained traction. The founder-CEO has pledged to spend hundreds of billions of dollars to build massive AI data centers, having shelled out $14.3 billion for a stake in startup Scale AI and poached its 28-year-old billionaire CEO, Alexandr Wang. After a lackluster reception for its Llama 4 model that led to staff departures, Meta has tried to revitalize its AI push by sparking a high-stakes talent war in which it has doled out more than $100 million in pay packages to researchers from rival firms. "We're just going to push very aggressively on all of that," Zuckerberg said on the conference call, referring to Meta's AI strategy. In the second quarter, AI-powered ad recommendations drove about 5% more conversions on Instagram and 3% on Facebook, the company said. Ad conversions refer to a user making a purchase or a commitment after clicking or viewing an ad. The tech giant recently introduced an AI-driven image-to-video ad creation tool under its Advantage+ suite, allowing marketers to generate video ads from static images. Meta reported revenue of $47.52 billion for the quarter ended June 30, which surpassed analysts' average estimate of $44.80 billion. Profit per share of $7.14 for the second quarter also exceeded estimates of $5.92. Instagram, whose Reels product competes with ByteDance's TikTok and YouTube Shorts for ad dollars in the popular short video format, is set to account for more than half of Meta's ad revenue in the U.S. this year, according to eMarketer. Reporting by Echo Wang in New York, Jaspreet Singh in Bengaluru and Kenrick Cai in San Francisco; Additional reporting by Jody Godoy in Washington; Editing by Tasim Zahid, Sayantani Ghosh, Matthew Lewis and Stephen Coates Our Standards: The Thomson Reuters Trust Principles., opens new tab * Suggested Topics: * Artificial Intelligence Echo Wang Thomson Reuters Echo Wang is a correspondent at Reuters covering U.S. equity capital markets, and the intersection of Chinese business in the U.S, breaking news from U.S. crackdown on TikTok and Grindr, to restrictions Chinese companies face in listing in New York. She was the Reuters' Reporter of the Year in 2020.

Microsoft, Meta surge after blowout results

LONDON, July 31 (Reuters) - Shares in artificial intelligence heavyweights Microsoft (MSFT.O), opens new tab and Meta Platforms (META.O), opens new tab both surged in European trading on Thursday, after blowout quarterly results after-market on Wednesday. Meta shares surged 12.2% in Frankfurt after it forecast quarterly revenue well ahead of Wall Street expectations. Microsoft shares jumped 9%, as surging Azure cloud computing revenue above analysts' expectations, showcasing the growing return on its AI bets. The jump in shares lifted futures on Wall Street, with S&P futures up 1% and futures on the technology-heavy Nasdaq up 1.3%. Reporting by Samuel Indyk; Editing by Amanda Cooper Our Standards: The Thomson Reuters Trust Principles., opens new tab

Wall St futures hit record peaks as Meta, Microsoft results get AI boost

July 31 (Reuters) - Futures tied to the S&P 500 and Nasdaq surged to record highs on Thursday after strong earnings from tech giants Meta and Microsoft reinforced investor confidence that artificial intelligence investments are paying off. Meta Platforms (META.O), opens new tab soared 11.5% in premarket trading after the social media giant forecast third-quarter revenue well above estimates, thanks to AI boosting its core advertising business. Microsoft (MSFT.O), opens new tab issued a record capital spending outlook of $30 billion for the current quarter and reported higher-than-expected sales in its Azure cloud computing business. The stock surged 8.3%. Other tech heavyweights such as Amazon (AMZN.O), opens new tab and Nvidia (NVDA.O), opens new tab also climbed 3.2% and 1.6%, respectively, while Microsoft was on track to hit a $4 trillion market capitalization for the first time. At 05:53 a.m. ET, Dow E-minis were up 151 points, or 0.34%, Nasdaq 100 E-minis were up 302.5 points, or 1.29%, and S&P 500 E-minis were up 60.5 points, or 0.95%. The Wall Street indexes are also set for monthly gains amid easing trade tensions and renewed enthusiasm around AI. On Wednesday, the S&P 500 (.SPX), opens new tab and blue-chip Dow (.DJI), opens new tab ended lower as Federal Reserve Chair Jerome Powell diluted investor expectations for an interest rate cut in September after the central bank kept rates unchanged, as widely expected. Powell said it was too early to predict a September rate cut, adding that current policy is not restricting the economy. The statement came after stronger-than-expected GDP data for the second quarter. Data on Personal Consumption Expenditure (PCE) - the Fed's preferred inflation gauge - for June is due to be released at 08:30 a.m. ET. Traders see a 56.8% chance for a September rate cut, according to the CME Group's FedWatch tool. Investors also braced for Friday's non-farm payrolls data and tariff deadline set by U.S. President Donald Trump, who has vowed to not grant any extension to trading partners that fail to secure a deal. EU officials said European liquor could face 15% tariffs from August 1 until a different agreement is reached, with talks set to continue in the fall. Trump announced a trade deal with South Korea on Wednesday, setting an import tariff of 15% for the Asian country, down from a threatened 25%. However, caution prevailed after he threatened to impose a 25% tariff on India, even as the two nations remain at the negotiating table. In other stocks, Applied Digital (APLD.O), opens new tab soared 26% after the data center operator surpassed estimates for quarterly revenue, thanks to AI-driven demand for its cloud infrastructure. Reporting by Nikhil Sharma in Bengaluru; Editing by Devika Syamnath Our Standards: The Thomson Reuters Trust Principles., opens new tab

Microsoft and Meta fuel $500-billion gain in AI stocks

July 30 (Reuters) - Wall Street's AI heavyweights added a combined half a trillion dollars in stock market value late on Wednesday after quarterly reports from Microsoft (MSFT.O), opens new tab and Meta Platforms (META.O), opens new tab showed massive investments in the emerging technology were paying off. In extended trade, Microsoft jumped 8% and Meta surged 9%, with the two Magnificent Seven companies increasing their market values by $288 billion and $152 billion, respectively. Dominant AI chipmaker Nvidia (NVDA.O), opens new tab, the world's most valuable company, climbed 1%, while Amazon (AMZN.O), opens new tab, which reports its results on Thursday, added over 2%. Shares of the U.S. stock market's most valuable companies have surged in recent years as they race to dominate artificial intelligence, and their massive investments have left investors eager to see results. Fueling the late-day enthusiasm for AI-related stocks, Meta forecast quarterly revenue well ahead of Wall Street expectations and raised the lower end of its annual capital expenditures forecast by $2 billion, driven by its high-stakes push for "superintelligence" in the heated AI race. Microsoft also delivered a blowout quarterly report, with its Azure cloud-computing business powering revenue above Wall Street's expectations and showcasing the growing returns on its AI bets. Reporting by Noel Randewich Editing by Rod Nickel Our Standards: The Thomson Reuters Trust Principles., opens new tab * Suggested Topics: * Artificial Intelligence Noel Randewich Thomson Reuters San Francisco correspondent covering the stock market with a focus on Big Tech, semiconductors and other Silicon Valley companies

Meta shares jump on big revenue forecast, small capex raise

July 30 (Reuters) - Meta Platforms (META.O), opens new tab forecast third-quarter revenue well above Wall Street estimates on Wednesday, as artificial intelligence continued to strengthen its core advertising business, sending its shares up 10% in extended trading. The company also raised the lower end of its capital expenses forecast for the year. The bumper results could ease investor worries, at least for now, about Meta's forecast that the year-over-year growth rate in the fourth quarter would be slower than in the third quarter. Investors also shrugged off the company's comments on rising infrastructure and employee compensation costs, which Meta said would "result in a 2026 year-over-year expense growth rate that is above the 2025 expense growth rate." For the third quarter, Meta said it expected total revenue of $47.5 billion to $50.5 billion, compared with analysts' average estimate of $46.17 billion, according to data compiled by LSEG. Its third-quarter guidance assumed a 1% benefit from a weak dollar, it said in a statement. Meta expects both total expenses and capital expenditures to increase significantly in 2026, driven primarily by higher infrastructure costs and continued investment to support AI initiatives. "AI-driven investments into Meta's advertising business continue to pay off, bolstering its revenue as the company pours billions of dollars into AI ambitions like superintelligence," said eMarketer senior analyst Minda Smiley. "But Meta's exorbitant spending on its AI visions will continue to draw questions and scrutiny from investors who are eager to see returns." Smiley added that Meta's strong results signaled that the broader digital advertising market was not yet feeling the pain from tariffs. U.S. antitrust regulators have sued Meta to force it to restructure or sell Instagram and WhatsApp, claiming the company sought to monopolize the market for social media platforms used to share updates with friends and family. With court papers due in September, the judge overseeing the case is unlikely to rule until later this year at the earliest. Meta CEO Mark Zuckerberg testified in April that the company was initially slow to recognize the competitive threat of TikTok, and that Meta has over the years tried to build many apps that never gained traction. Meta said on Wednesday that while it was not providing an outlook for fourth-quarter revenue, the company expected the year-over-year growth rate in the period to be slower than in the third quarter. The social media giant raised the lower end of its annual capital expenditures forecast by $2 billion, driven by its high-stakes push for "superintelligence" in the heated AI race. The Facebook and Instagram parent now expects capital expenditures to be between $66 billion and $72 billion. Training and deploying advanced AI systems remain a capital-intensive endeavor, requiring costly hardware, massive computing resources and top-tier engineering talent. After a lackluster reception for its Llama 4 model that led to staff departures, Meta has tried to revitalize its AI push by sparking a high-stakes talent war in which it has doled out more than $100 million in pay packages to researchers from rival firms. Zuckerberg has pledged to spend hundreds of billions of dollars to build massive AI data centers, having shelled out $14.3 billion for a stake in startup Scale AI and poached its 28-year-old billionaire CEO, Alexandr Wang. To fund the push, the billionaire founder is leaning on Meta's massive user base as well as AI-powered improvements in content engagement that make it a stable bet for advertisers even in times of economic uncertainty. The tech giant recently introduced an AI-driven image-to-video ad creation tool under its Advantage+ suite, allowing marketers to generate video ads from static images. Instagram, whose Reels product competes with ByteDance's TikTok and YouTube Shorts for ad dollars in the popular short video format, is set to account for more than half of Meta's ad revenue in the U.S. this year, according to research firm eMarketer. Meta has also accelerated efforts to monetize its social media platforms WhatsApp and Threads by integrating ads. The company last month named insider Connor Hayes as head of Threads, a sign it was moving the platform away from Instagram's shadow after leaning on the photo-sharing app for growth. Meta reported record revenue of $47.52 billion for the quarter ended June 30, which surpassed analysts' average estimate of $44.80 billion, according to LSEG data. Its profit per share of $7.14 for the second quarter also exceeded estimates of $5.92. Reporting by Echo Wang in New York, Jaspreet Singh in Bengaluru and Kenrick Cai in San Francisco; Additional reporting by Jody Godoy in Washington; Editing by Tasim Zahid, Sayantani Ghosh and Matthew Lewis Our Standards: The Thomson Reuters Trust Principles., opens new tab * Suggested Topics: * Artificial Intelligence Echo Wang Thomson Reuters Echo Wang is a correspondent at Reuters covering U.S. equity capital markets, and the intersection of Chinese business in the U.S, breaking news from U.S. crackdown on TikTok and Grindr, to restrictions Chinese companies face in listing in New York. She was the Reuters' Reporter of the Year in 2020.

Big Tech may be breaking the bank for AI, but investors love it

July 31 (Reuters) - Big Tech is spending more than ever on artificial intelligence - but the returns are rising too, and investors are buying in. AI played a bigger role in driving demand across internet search, digital advertising and cloud computing in the April-June quarter, powering revenue growth at technology giants Microsoft (MSFT.O), opens new tab, Meta (META.O), opens new tab, and Alphabet (GOOGL.O), opens new tab. Betting that momentum will sustain, Microsoft and Alphabet decided to ramp up spending to ease capacity shortages that have limited their ability to meet soaring AI services demand, even after several quarters of multi-billion-dollar outlays. The results offer the clearest sign yet that AI is emerging as a primary growth engine, although the monetization journey is still in its early days, investors and analysts said. The upbeat commentary also bodes well for Amazon.com (AMZN.O), opens new tab, the largest U.S. cloud provider, which will report earnings on Thursday after markets close, and underscores how surging demand for the new technology is shielding the tech giants from tariff-driven economic uncertainty hobbling other sectors. "As companies like Alphabet and Meta race to deliver on the promise of AI, capital expenditures are shockingly high and will remain elevated for the foreseeable future," said Debra Aho Williamson, founder and chief analyst at Sonata Insights. But if their core businesses remain strong, "it will buy them more time with investors and provide confidence that the billions being spent on infrastructure, talent and other tech-related expenses will be worthwhile," she added. Microsoft shares rose about 9% in premarket trading on Thursday, putting the Windows maker on track to cross $4 trillion in market value - a milestone only chip giant Nvidia (NVDA.O), opens new tab has reached so far. Meta was up even more, rising 11.5% and on course to add nearly $200 billion to its market value of $1.75 trillion. Amazon gained over 3%. All the companies have faced intense scrutiny from investors over their ballooning capital expenditures, which were expected to total $330 billion this year before the latest earnings. And until a few days ago, the Magnificent Seven stocks were also trailing the S&P 500 (.SPX), opens new tab in year-to-date performance. SILENCING DOUBTS Microsoft said on Wednesday it would spend a record $30 billion in the current quarter, after better-than-expected sales and an above-estimate forecast for its Azure cloud computing business showcased the growing returns on its massive AI bets. The prediction puts Microsoft on track to potentially outspend its rivals over the next year. It came after Google-parent Alphabet beat revenue expectations and raised its spending forecast by $10 billion to $85 billion for the year. Microsoft also disclosed for the first time the dollar figure for Azure sales and the number of users for its Copilot AI tools, whose adoption has long been a concern for investors. It said Azure generated more than $75 billion in sales in its last fiscal year, while Copilot tools had over 100 million users. Overall, around 800 million customers use AI tools peppered across Microsoft's sprawling software empire. "It's the kind of result that quickly silences any doubts about cloud or AI demand," said Josh Gilbert, market analyst at eToro. "Microsoft is more than justifying its spending." Other AI companies have also attracted a clutch of users. Alphabet said last week its Gemini AI assistant app has more than 450 million monthly active users. OpenAI's ChatGPT, the application credited with kicking off the generative AI frenzy, has around 500 million weekly active users. Meta, meanwhile, raised the bottom end of its annual capital expenditure forecast by $2 billion, to a range of between $66 billion and $72 billion. It also said that costs driven by its efforts to catch up in Silicon Valley's intensifying AI race would push 2026 expense growth rate above 2025's pace. Better-than-expected sales growth in the April-June period and an above-estimate revenue forecast for the current quarter, however, assured investors that strength in the social media giant's core advertising business can support the massive outlays. "The big boys are back," said Brian Mulberry, portfolio manager at Zacks Investment Management, which holds shares in all three major U.S. cloud providers. "This simply proves the Magnificent Seven is still magnificent at this moment in time." Reporting by Aditya Soni and Deborah Sophia in Bengaluru, Echo Wang in New York; Editing by Muralikumar Anantharaman Our Standards: The Thomson Reuters Trust Principles., opens new tab

Microsoft, Meta's AI-powered results lift Wall St futures to new highs

July 31 (Reuters) - S&P 500 and Nasdaq futures climbed to record levels on Thursday, after blockbuster earnings from Meta and Microsoft signaled Big Tech's hefty artificial intelligence bets were paying off. Meta Platforms (META.O), opens new tab soared 12.3% in premarket trading after the social media giant forecast third-quarter revenue well above estimates, thanks to AI boosting its core advertising business. Microsoft (MSFT.O), opens new tab issued a record capital spending outlook of $30 billion for the current quarter and reported higher-than-expected sales in its Azure cloud computing business. The stock surged 8.8% before the bell. Other tech heavyweights Amazon (AMZN.O), opens new tab and Nvidia (NVDA.O), opens new tab also climbed 3.4% and 1.9%, respectively, while Microsoft was on track to hit a $4 trillion market capitalization for the first time. At 06:45 a.m. ET, S&P 500 E-minis were up 63.5 points, or 0.99%, Nasdaq 100 E-minis were up 315.5 points, or 1.34%, and Dow E-minis were up 135 points, or 0.3%. The White House has clinched key trade deals this month, ahead of the August 1 deadline, easing fears of a trade war. That, coupled with the ongoing AI boom, has set U.S. stock indexes on track for robust monthly gains. The S&P 500 and Dow are eyeing their third consecutive month in positive territory - their longest winning streak in nearly a year, while the Nasdaq was poised for its best monthly run in over 12 months. On Wednesday, the S&P 500 (.SPX), opens new tab and blue-chip Dow (.DJI), opens new tab ended lower as Federal Reserve Chair Jerome Powell diluted investor expectations for an interest rate cut in September after the central bank kept rates unchanged, as widely expected. Traders now see a 62.8% chance the Fed will stay pat in September as well, according to CME's FedWatch tool. Powell said it was too early to predict a September rate cut, and that current policy was not restricting the economy. The statement came after stronger-than-expected GDP data for the second quarter. Data on Personal Consumption Expenditure (PCE) - the Fed's preferred inflation gauge - for June is due to be released at 08:30 a.m. ET. Meanwhile, investors are also bracing for Friday's jobs report and the looming tariff deadline, as Trump stood firm on not extending trade negotiations for lagging partners. EU officials said European liquor could face 15% tariffs from August 1 until a different agreement is reached, with talks set to continue in the fall. Trump also announced a trade deal with South Korea on Wednesday, setting an import tariff of 15% for the Asian country, down from a threatened 25%. However, caution prevailed after he threatened to impose a 25% tariff on India, even as the two nations remain at the negotiating table. In other stocks, Applied Digital (APLD.O), opens new tab soared 24.1% after the data center operator surpassed estimates for quarterly revenue, thanks to AI-driven demand for its cloud infrastructure. Reporting by Nikhil Sharma and Pranav Kashyap in Bengaluru; Editing by Devika Syamnath Our Standards: The Thomson Reuters Trust Principles., opens new tab

What top Wall Street analysts are watching in Meta's earnings out Wednesday

Wall Street remains bullish on Meta Platforms' longer-term strategy, but analysts remain watchful of how the company's artificial intelligence efforts could weigh on its second-quarter results out Wednesday. Meta shares have rallied 20% this year through Tuesday, more than twice the return in the S & P 500, as concerns about economic growth, inflation and tariffs have dissipated. Of the 77 analysts covering Meta, 63 rate it either either a buy or a strong buy. Only seven have a hold rating. While sentiment remains strong, some analysts expect Meta's recent AI spending spree and $14.3 billion ScaleAI investment to potentially overshadow second-quarter earnings. Revenue growth in the period likely slowed to 15%, down from 22% a year ago, according to LSEG. Investors will listen closely to Meta CEO Mark Zuckerberg's explanation for the Instagram parent's shifting AI strategy. Take a look at how the Street is positioned toward Meta ahead of results: Morgan Stanley: overweight rating, price target to $750 from $650 Analyst Brian Nowak sees generative AI driving higher monetization and engagement levels and, eventually, faster revenue growth. Among the keys to Meta outperforming in the second half of the year are the launch of its next-generation Llama AI models and new AI products "to help the market better understand the [return on invested capital] of the recent heavy hiring and capex investments," he said. "We raise our revenue estimates 3%/6% in '25/'26 driven by better-than-expected ad checks as tariff concerns alleviated, continued GPU enabled ad innovation, and improving FX dynamics," Nowak wrote in a July 20 note to clients. "These higher top-line estimates flow through to the bottom line as we raise EPS 5%/7% in '25/'26. With these changes, we arrive at a $750 PT after rolling our valuation to mid-year." Bank of America: buy, $775 price target Analyst Justin Post's price target implies Meta shares could rise another 11% from Tuesday's close of $700. "With AI [return on investment] a key stock sentiment driver, 2Q positives could include: 1) Ad rev upside reinforcing confidence in Meta's AI ad engine, 2) strong road map for 2H ad products, 3) optimism on new revenue opportunities for AI (Llama licensing, subscriptions, etc.) With Street likely anticipating 2Q revenue upside, risks are high [that] expectations and higher expenses offset revenue revisions. Also, EU regulatory uncertainty is likely to continue," Post wrote in a note late last week. Post added that he continues to see Meta as "one of the best AI opportunity stocks, with potential revenue upside as AI capabilities are integrated into the ad stack." Jefferies: buy, price target to $845 from $790 The investment bank remains bullish on Meta, but said that Facebook Reality Labs investments should weigh on the company's near-term profit margins. Meta's ScaleAI investment and AI hiring spree could also pressure earnings, analyst Brent Thill said in a July 16 note. "AI hiring spree signals urgency, though near-term margin pressure is likely. Capex to remain elevated ($68.6B/$74.2 in FY25/26) but bullish on its LT ROI," Thill wrote, adding that new ad dollars are already pouring into Meta's mobile ad campaigns and that the company is seeing "deep engagement" across its Instagram, Messenger and WhatsApp platforms. Rosenblatt Securities: buy, $918 price target Analyst Barton Crockett's price target suggests Meta shares might rally another 31% from Tuesday's close. Crockett said that Meta's free cash flow should get a boost from the tax credits for capital spending in the Trump administration's One Big Beautiful Bill Act. Meta "is spending many tens of millions of dollars to hire an all star AI staff. That spending could pose a risk to the P & L, or perhaps be a sign that CEO Mark Zuckerberg is confident in AI-driven cost savings to spend the money without blowing up Meta's cash flow," Crockett said in a July 22 note. Deutsche Bank: buy, $770 price target Meta's "AI talent war [is] center stage," analyst Benjamin Black wrote in a July 21 note to clients. "AI enhancements via Advantage+ are increasingly manifesting themselves in the form of improved return on ad spend (ROAS), which we expect will be a durable source of growth for Meta going forward, as Advantage+ becomes the default campaign-setup across more advertisers this year," Black said. "Additionally, deep auction dynamics are largely offsetting the impact of any large buyers exiting, with e-commerce spend growth on Meta accelerating in May and June, returning to pre-liberation day levels after the drop-off in April."

Meta slated to reported second-quarter earnings after the bell

Mark Zuckerberg, CEO of Meta Platforms.David Paul Morris | Bloomberg | Getty Images Meta is set to report its second-quarter earnings on Wednesday, with analysts eyeing any changes to the company's costs and related guidance amid CEO Mark Zuckerberg's recent artificial intelligence hiring blitz. Here's what analysts polled by LSEG are expecting: Investors are likely to be monitoring any comments from Zuckerberg about his company's recent spending on AI and how that technology might benefit Meta's core online advertising business. Meta kicked off its AI hiring bonanza in June when it invested $14.3 billion into Scale AI, landing the data-annotating startup's CEO Alexandr Wang to co-lead the new Meta Superintelligence Labs as the company's chief AI officer. Zuckerberg undertook the AI strategy overhaul to help the company regain momentum after lukewarm developer response to its Llama 4 AI model, CNBC reported Tuesday. Cantor analysts wrote that they do not expect Meta's AI hiring spree will affect the company's 2025 projections for total expenses, estimated to fall in the range between $113 billion and $118 billion. If anything, Meta's AI hiring blitz could move "the target above the low end," the Cantor analysts wrote. Zuckerberg said in July that the company would invest "hundreds of billions of dollars" into computing infrastructure for its AI endeavors, but the company hasn't officially revised its 2025 capital expenditures since April. That month, Meta said its 2025 capital expenditures would come in the range of $64 billion to $72 billion, which was an increase from its previous outlook of $60 billion to $65 billion. Analysts at BofA Securities said in a research note published Friday that there are signs that Meta could post second-quarter sales at or above the high end of the company's previous guidance of $42.5 billion to $45.5 billion for the period. Those positive signs include an increase of advertising spending from brands during the quarter and Google's strong quarterly earnings results from last week, the analysts wrote, which implies that Meta, second only to Alphabet in digital advertising, could also post solid results.

Meta stock surges after Q2 results blow past expectations despite heavy AI spending

In the midst of an artificial intelligence spending spree, Meta posted stronger-than-expected results for the second quarter, buoyed by growing ad revenue even as its expenses increased. Shares of Meta Platforms Inc. surged more than 9% after-hours as a result. The Menlo Park, California-based company earned $18.34 billion, or $7.14 per share, in the April-June period. That's up 36% from $13.47 billion, or $5.16 per share, in the same period a year earlier. Revenue jumped 22% to $47.52 billion from $39.07 billion. Analysts expected Meta to earn $5.88 per share on revenue of $44.81 billion, according to a poll by FactSet. Meta said it expects costs to increase as it spends billions on infrastructure and luring highly compensated employees as it works on its AI ambitions. It's forecasting 2025 expenses to be in the range of $114 billion to $118 billion, up 20% to 24% year-over-year.

This comment from Meta on its conference call is what has reinvigorated the AI trade

Meta has stepped up spending to build out infrastructure to power artificial intelligence, and that's reviving the AI trade, which had been showing signs of fatigue. "While the infrastructure planning process remains highly dynamic, we currently expect another year of similarly significant capital expenditures, dollar growth in 2026, as we continue aggressively pursuing opportunities to bring additional capacity online to meet the needs of our artificial intelligence efforts and business operations," Susan Li, chief financial officer of Meta, said on the company earnings call Wednesday evening. The social media company said capital expenditures will come in between $66 billion and $72 billion , raising the low end of the company's previous estimate of between $64 billion and $72 billion. Investors cheered the news, pushing up Meta shares by more than 10% Thursday. META 1D mountain Meta Thursday Meta's peer Microsoft also seized on investment opportunities in AI, expecting more than $30 billion in fiscal first-quarter capital expenditures and assets acquired through finance leases, which would work out to annual growth above 50%. Microsoft stock climbed nearly 4% Thursday, pushing the company's market cap past $4 trillion . Megacap technology companies tend to rely on their legacy businesses to fund their pursuits of expensive AI infrastructure. Expectations from Wall Street were high for these companies to increase spending on AI infrastructure needs in the current boom. Several chipmaker stocks got a boost from Big Tech's lucrative spending plans. Nvidia and Advanced Micro Devices gained more than 1% each on Thursday. Broadcom was down 1%, while Micron slipped more than 4%. "We believe AVGO and AMD will be the primary beneficiaries of Microsoft's and Meta's increased capex," Citi said in a note to clients. "We note that Microsoft is roughly 8% of AMD's sales and Meta is roughly 2% of AVGO's sales. We view this as positive for AI-exposed stocks such as AVGO, AMD, MU, and NVDA."

Meta Platforms profits surge helps fuel Zuckerberg's AI ambitions

Meta says the cost of building infrastructure, including servers and data centres, and workers' pay packages will be its biggest expenses. Before Meta's earnings announcement on Wednesday, Zuckerberg posted a video on Instagram describing his plans for developing what he calls "AI Superintelligence" that surpasses "human intelligence to solve complex problems". He also said Meta will create "personal superintelligence" that uses advanced AI for everyday tasks like helping users remember things like wedding anniversaries and then making reservations or ordering a gift. Mike Proulx from research and advisory firm Forrester said Meta is helping "future-proof itself as a growth company" in the event that its current offerings falter. Meta has been seeking to catch up with rival artificial intelligence developers like OpenAI and Google after the release of Llama 4 left some users and investors disappointed. It has offered $100m pay packages to top AI talent to lure them away from competitors. It has also spent more than $14bn on a stake in artificial intelligence firm ScaleAI and brought in its chief executive Alexandr Wang to help spearhead its efforts. Zuckerberg's strategy has been to use the strength of Meta's core businesses to help fund its AI ambitions. He said 3.4 billion around the world use at least one Meta app every day. Meta has also deployed AI to improve its advertising business. But the the cost of developing superintelligence have raised concerns among some analysts. "AI-driven investments into Meta's advertising business continue to pay off, bolstering its revenue as the company pours billions of dollars into AI ambitions like superintelligence," said Minda Smiley from market research firm Emarketer. "But Meta's exorbitant spending on its AI visions will continue to draw questions and scrutiny from investors who are eager to see returns," she added. Meta's shares jumped by more than 10% in extended trading in New York after its earnings announcement.

Big tech sees AI investments begin to pay off

Why it matters: Investors will want to see those massive investments not only generate revenue, but profits too. * While investors applauded strong returns from Google, Microsoft and Meta, there are signs that their patience is not infinite. * Light guidance from Amazon sent shares plunging Thursday, and even if not directly tied to AI spending, it reflects the high hopes the market is pinning on the AI leaders. Driving the news: Microsoft and Google credited the AI boom with helping them deliver better-than-expected results for the most recent quarter. * Investors weren't wowed by Amazon's outlook, but the Web Services business generated nearly $31 billion in quarterly revenue, about what analysts were expecting. * Shares of Meta surged after CEO Mark Zuckerberg unveiled his personal superintelligence strategy, the thesis underlying the massive investments that he's making not only in computing horsepower, but also in talent. * Apple delivered a strong quarter, though that was thanks to iPhone sales. The company has struggled to deliver on Apple Intelligence, with some features promised last year having yet to ship and only modest advances included in the latest versions of the software that powers its devices. * OpenAI -- still a private company and not subject to quarterly disclosures -- is also seeing continued, rapid growth. The Information reported this week that the ChatGPT maker now generates about $1 billion per month in revenue, up from $500 million per month at the start of 2025. Between the lines: The tech giants are all spending huge on data centers and computing horsepower, helping Nvidia become the first company with a $4 trillion market capitalization, and Microsoft the second. * OpenAI is expanding its Stargate data center network, announcing plans on Thursday for the first European project: Stargate Norway. * Meta, which has been making headlines for its eye-popping salary offers to top AI engineers, is also spending big on computing capacity. * Microsoft expects to spend $100 billion in capital expenses next year, including a record $30 billion this quarter, mostly for AI. * All told, big tech companies invested roughly $245 billion in AI infrastructure last year and are seen upping that to $320 billion this year, per numbers compiled by the Financial Times. What they're saying: "Meta's blowout quarter was the best example to date of AI having a tangible impact on revenue and earnings growth at scale," longtime tech analyst Gene Munster wrote this week. "The question of whether AI has an ROI can be put to rest." Bottom line: AI is fueling revenue, but spending is growing even faster.

What Wall Street will be looking for in Meta's Q2 earnings

Meta's second-quarter earnings won't just be a referendum on the company's ad business -- it'll be a pivotal moment to assess whether the company's frenetic AI investments are paying off or simply draining its balance sheet. And when the company releases its numbers Wednesday after the bell, they'll be a stress test of how long Wall Street is willing to bankroll CEO Mark Zuckerberg's vision of the future. Investors have largely kept the faith so far. Meta has beaten Wall Street expectations for four straight quarters, with its ad business doing most of the heavy lifting. But the company is spending like it's building a new internet -- maybe because it is. Full-year capital expenditures are now expected to reach somewhere between $64-$72 billion as Meta races to build out infrastructure for AI and hardware, from AI-powered smart glasses to in-house chips such as the Hyperion and Prometheus superclusters. Analysts expect Meta to report revenue between $44.55 billion and $44.8 billion, up about 14-15% year over year, with earnings per share in the $5.83-$5.89 range. The market may be less forgiving this time if there isn't any clear AI upside, but analysts remain upbeat. Per Visible Alpha, 25 of 27 analysts rate the stock a "Buy," with price targets between $740-800, largely predicated on ad growth, AI adoption, and WhatsApp monetization. Still, the company is currently trading at 28.25x forward earnings, leaving little room for error if the tech company's capital expenditures surge or margins slip. The company's goal: Build AI with capabilities that could fuel, well, everything. Zuckerberg has said that he thinks superintelligence "will be the beginning of a new era for humanity" and that he is "fully committed to doing what it takes for Meta to lead the way." Meta's investments to make the CEO's big dreams happen are already enormous. In addition to building out multi-gigawatt data centers to support AI model training, Meta has poured billions into partnerships and acquisitions -- including a $14 billion stake in Scale AI -- as it looks to own not just models such as Llama 3 and 4 but the compute and infrastructure underneath. That kind of moonshot ambition has gone over surprisingly well with analysts: Bank of America recently raised its price target on Meta to $783, saying leadership is taking decisive action to fortify its AI bets. Canaccord Genuity just lifted its price target to $850, citing the potential payoff of AI innovations in ad tech and platform monetization. Some analysts, however, are beginning to question the wisdom of pouring so much capital into long-term bets without a near-term revenue stream. On Friday, Guggenheim downgraded Meta to "Neutral," saying AI-related hype was already priced in. Right now, any AI optimism comes with rising expectations. If this quarter's results show only incremental AI lift or margin deterioration, Meta's soaring valuation -- and Zuckerberg's free-spending vision -- could suddenly look a lot more fragile. The question investors will be asking: When does any AI spending generate meaningful ROI? But behind Meta's big headlines lurks a sobering reality: Its Reality Labs division continues to burn billions, and consensus growth expectations are reaching a price that demands flawless execution. In the first quarter of the year, that division posted $4.2 billion in losses -- after posting $17.7 billion in losses in 2024; and that number could rise to nearly $20 billion in 2025, including roughly $4.9-$5.3 billion this quarter in some of the latest estimates. Much of Zuckerberg's hardware and Metaverse vision has yet to pay off, and Meta's virtual reality bets -- including Horizon Worlds and Quest headsets -- have struggled to reach mainstream users. One bright spot: the Ray-Ban Meta smart glasses, co-developed with EssilorLuxottica. Zuckerberg claimed on the first-quarter earnings call that Meta's glasses partnership has "tripled in sales" year-over-year, and there's a plan to ramp production up to 10 million units annually. The glasses are now integrated with Meta's standalone app and its Llama 4-powered AI assistant. Despite growing privacy concerns about the use of smart glasses, Meta has doubled down on the hardware with a $3.5 billion stake in EssilorLuxottica and a partnership with Oakley. But until scale materializes, the broader business must carry the burden of this long‑term bet. WhatsApp now boasts over 200 million businesses using its tools, according to Bank of America, and analysts believe its long-term revenue potential could exceed $20 billion annually if even a modest share of users adopt AI-powered services or business messaging. Click-to-message ad revenue already surpassed $10 billion a year -- and could rise as high as $40 billion, per projections from Wolfe Research and William Blair's Ralph Schackart, who estimates that WhatsApp could generate $5 billion in incremental profit by 2028. JPMorgan has flagged WhatsApp as a key growth driver over the next two years, and Q2 could offer early signs of that shift as business adoption accelerates. Still, regulatory pressure and privacy backlash -- particularly in Europe and India -- could cloud the upside. If there are any new details or color on engagement or monetization rates during Wednesday's earnings call with Zuckerberg and other leadership, this area could be a headline-maker. Threads is quietly scaling, too. But monetization on Threads remains in the early innings. Any color on time spent, advertiser tests, or user retention -- especially in context with WhatsApp and Instagram monetization strategies -- could influence analyst sentiment. Investors will also look for updates on time spent and daily active users across Facebook and Instagram, especially in North America and Europe, where growth has leveled off. Any slowdown in user engagement could pressure ad revenue and signal saturation in Meta's core business. Reels continues to close the monetization gap with Stories, but investors will want fresh data on ad load and click-through rates -- particularly as TikTok faces continued regulatory scrutiny and a potential ownership change in the U.S. Margin discipline is another major line of scrutiny. Capex is ballooning, but Wall Street is especially sensitive right now to operating leverage. Meta's margins slipped slightly last quarter (from 38% to 37%), and if they erode further -- particularly on hiring, data center burn, or Reality Labs costs -- valuation will be vulnerable. Still, with nearly $60 billion in cash and strong free cash flow, Meta's capital allocation (including potential buybacks) may help cushion investor reaction if guidance disappoints. And regulatory risks lurk in every corner of Meta's AI agenda. The company has refused to sign the European Union's voluntary AI Code of Practice, arguing that the guidelines introduce legal uncertainty beyond the existing AI Act, elevating tensions with Brussels as the legislation takes effect by August 2026. Courtrooms, too, are part of Meta's battleground. The company is wrestling with regulatory crackdowns in Europe following an April 2025 €200 million Digital Markets Act fine, which forces it to offer limited, data-lite versions of its ad products in Europe, already slashing SME ad conversions by as much as 70%. Meta is appealing, but the ruling may force strategic changes before Q3. Elsewhere, Meta faces continued legal fights over content moderation, labor practices, data transfers, tax structures, and alleged misconduct. Beyond the second quarter, Meta's third-quarter guidance could set the tone for the stock. Investors will be sensitive to signs of softening ad budgets or rising FX headwinds, especially as seasonal ad spending patterns shift in a high-rate environment. Ultimately, Wall Street will be watching to see whether Meta can thread the needle: turning sky-high infrastructure and hiring costs into meaningful product and revenue gains while fending off (and surpassing) rivals in the AI race. With Meta's stock up over 19% year to date and currently trading near all-time highs, the stakes couldn't be higher -- and the margin for error couldn't be smaller.

Meta smashes Q2 earnings as its AI investments surge

Before Meta's superintelligence ambitions can change the world, they had to pass the far less glamorous test of a quarterly earnings call. And they did. The tech giant crushed second-quarter earnings expectations (a fifth-straight beat): $47.52 billion in revenue (up 22%) and $7.14 EPS (up 38%), well above analysts' estimates ($44.6-44.8 billion in revenue and $5.85‑5.89 EPS). The stock popped over 10% in after‑hours trading, fueled less by nostalgia for ad growth and more by investor hunger for confidence in its moonshot AI buildout. Ad demand has remained solid despite a rocky macroeconomic backdrop, and Meta's AI ad tools (Advantage+ and others) have juiced returns for marketers. But those numbers weren't what had analysts watching the earnings so closely. Instead, all eyes have been on what Meta says about the future -- and how much it's willing to spend to build it. CEO Mark Zuckerberg has already warned that 2025 will be a heavy investment year. The company has been spending like it's building a new internet -- maybe because it is. Meta's capital expenditures hit $17.01 billion this quarter (expectations for the year are $64-72 billion), primarily for its "superintelligence" effort, including new data centers, Hyperion and Prometheus buildouts, and the kind of AI research that is supposed to take Meta from social platform to superintelligence pioneer. Plus, the company has made high‑profile hires such as Scale AI founder Alexandr Wang and has poached employees from Meta's rivals (with some truly outrageous pay packages that have been rumored to reach $1 billion). Zuckerberg has said that this wave of investment will "set the foundation for AI for the next decade." Wall Street, on the other hand, wants to know when it will start setting the foundation for margin growth. Meta's clandestine "superintelligence" AI lab in Menlo Park, California, is Zuckerberg's latest moonshot. In fact, he has personally been overseeing the recruiting -- partially in group chats he named "Recruiting Party." While Wall Street has expected marked AI progress, it has demanded signs of ROI beyond mere "engagement up" gibberish. And investors want to know if this latest venture is gearing up to be the future -- or the balance‑sheet nightmare of tomorrow. "We've had a strong quarter both in terms of our business and community," Zuckerberg said in the earnings release. "I'm excited to build personal superintelligence for everyone in the world." Advertising remains Meta's cash‑cow -- nearly 98% of quarterly revenue ($46.38 billion of Meta's $47.55 billion in total revenue) -- primed by new AI tools such as Advantage+ and Andromeda boosting ad ROI. Meta has leaned into automation for small businesses and cross-platform ad optimization, and so far, the pitch is working. Time spent on Reels is rising, WhatsApp business messaging continues to scale quietly, and monetization tools for creators are gaining traction -- especially in regions such as Southeast Asia, where user growth is still brisk. But headwinds remain: Chinese e‑commerce ad spending from companies such as Temu and Shein has cratered amid U.S.-China trade tensions, though Western and other low‑cost retailers may help fill that gap. Meanwhile, Reality Labs -- Meta's metaverse division -- continues to bleed cash: The unit lost $4.53 billion in the second quarter. While Meta has shifted messaging to frame VR and AR devices as future AI endpoints, investors remain skeptical. So far, Wall Street has been generous. Meta shares were up more than 16% this year ahead of earnings, and nearly every analyst covering the stock still rates it a buy. Ahead of the earnings release, Yahoo Finance data showed that 63 of 71 analysts rate Meta a "Buy" or "Strong Buy" with price targets clustering between $750 and $800 -- so skepticism is thin on the ground, but risk is high. The average target already implies very little upside from the current share price. A knockout quarter gave Meta the win. But with its AI moonshot now officially on the clock, the real test is just beginning.

Meta stock surges after Q2 results blow past expectations despite heavy AI spending

Meta's artificial intelligence spending spree appears to be paying off with investors, who sent the company's stock soaring after hours on Wednesday following a blowout quarterly earnings report. The Menlo Park, California-based company easily beat Wall Street's expectations for the second quarter, helped by higher advertising revenue and a growing user base on its flagship social media platforms. The money is helping to fund the company's massive investments in AI development and hiring top talent at eye-popping compensation levels. "Not only has Meta made demonstrable strides with AI, but it's helping to future proof itself as a growth company, should its family of apps get affected by the current anti-trust case or changing social media sentiment," said Forrester research director Mike Proulx. Meta is facing an antitrust case that's now awaiting a judge's decision and could force the company to break off WhatsApp and Instagram, startups Meta bought more than a decade ago that have since grown into social media powerhouses. The company earned $18.34 billion, or $7.14 per share, in the April-June period. That's up 36% from $13.47 billion, or $5.16 per share, in the same period a year earlier. Revenue jumped 22% to $47.52 billion from $39.07 billion. Analysts expected Meta to earn $5.88 per share on revenue of $44.81 billion, according to a poll by FactSet. Meta's daily active user base on its apps -- Facebook, Messenger, WhatsApp, Instagram and Threads -- was 3.48 billion, up 6% year-over-year. Meta said it expects costs to increase as it spends billions on infrastructure and luring highly compensated employees as it works on its AI ambitions. It's forecasting 2025 expenses to be in the range of $114 billion to $118 billion, up 20% to 24% year-over-year. In the latest demonstration of his AI enthusiasm, CEO Mark Zuckerberg on Wednesday posted a note detailing his views on "personal superintelligence" that he believes will "help humanity accelerate our pace of progress." While he said that developing superintelligence is now "in sight," he did not detail how this will be achieved or exactly what "superintelligence" means. The abstract idea of "superintelligence" is what rival companies call artificial general intelligence, or AGI. It's the latest pivot for a tech leader who in 2021 went all-in on the idea of the metaverse, changing the company's name and investing billions into advancing virtual reality and related technology. "Meta's vision is to bring personal superintelligence to everyone. We believe in putting this power in people's hands to direct it towards what they value in their own lives," Zuckerberg wrote. "This is distinct from others in the industry who believe superintelligence should be directed centrally towards automating all valuable work, and then humanity will live on a dole of its output." Zuckerberg said in a conference call he believes AI glasses are going to be "the main way we integrate superintelligence." Last month, Meta invested $14.3 billion in AI company Scale and recruited its CEO Alexandr Wang to join a team developing "superintelligence." The tech giant also cut a 20-year deal in early June to secure nuclear power to help meet surging demand for AI and other computing needs. Meta ended the quarter with 75,945 employees, up 7% from a year earlier. Meta's shares rose $81.87, or 11.8% to $777.08 in after-hours trading -- on track to reach a record high Thursday after the stock market opens.

Meta's Mark Zuckerberg laid out his AI vision that outperformed Q2 expectations and sent shares soaring

Meta Platforms CEO Mark Zuckerberg expects to deliver "personal superintelligence for everyone" but his ambitious bets on AI are impacting the company's cash flows and are likely to hit expenses even harder as Meta soups up its AI capabilities and continues its hiring spree. The social media giant spent $17 billion on capital expenditures during the quarter, mostly on AI infrastructure and data centers and it expects to continue to spend heavily through 2026. Still, Meta's shares soared 11.5% in after-hours trading after delivering blockbuster second quarter financial results. Revenue cruised 22% higher to $47.5 billion, and its core advertising business generated $46.6 billion in ad revenue across Facebook, Instagram, WhatsApp, and Messenger. Daily active users grew to 3.5 billion people and profit margins improved, with net income rising 36% to $18.3 billion compared to last year. "The intersection of technology and culture is where Meta focuses," said Zuckerberg in an Instagram reel defining Meta's aims for superintelligence. The new lab will focus on developing the next generation of Meta's models, he said. Zuckerberg said the company is building an "elite, talent-dense team," led by one of the world's youngest billionaires, Alexandr Wang. "I spent a lot of time building this team this quarter," said Zuckerberg. "The reason so many people are excited to join is because Meta has all of the ingredients required to build leading models and deliver them to billions of people." The new superintelligence team will have access to "unparalleled compute" as Meta builds out new gigawatt+ clusters. "We're making all these investments because we have conviction that superintelligence is going to improve every aspect of what we do," Zuckerberg said.

Meta's ad business is funding Mark Zuckerberg's AI vision

Mark Zuckerberg doesn't need your AI patience. He has your money. Right now, the Meta CEO -- and his company -- is spending like a man who has never heard the word "budget." The Silicon Valley giant, in its second-quarter earnings posted Wednesday, hiked its 2025 capital expenditure forecast to an eye-watering $66-72 billion, close to triple its 2022 spending and more than double what it initially planned for this year. That money is being poured into "superintelligence" labs, custom silicon, AI data centers, high-performance compute clusters, and the kind of recruiting benders that are usually reserved for startup fever dreams. Zuckerberg has reportedly offered nine-figure compensation packages to lure top researchers from OpenAI, Google DeepMind, and other competitors, fueling an AI arms race so intense that Meta's AI budget now rivals that of sovereign nations. Wall Street's response? Applause. Keep going. You're doing great, sweetie! Wedbush analyst (and major tech bull) Dan Ives wrote in a post on X: "We have been talking about the AI Revolution for years but tonight was a night the tech world and the Street will remember for a long time." On paper, this is one of the most aggressive infrastructure buildouts in Silicon Valley history. In practice? It's the cost of keeping up with a narrative that Zuckerberg really, really doesn't want to lose: That Meta is still a technology company, not just an ad platform with delusions of grandeur. But that core business -- digital advertising -- remains such a relentless moneymaker that, as long as the clicks keep converting, Zuckerberg gets to keep playing visionary. And investors get to keep cashing in. The company's second-quarter earnings report was a financial flex: $47.52 billion in revenue (up 22%), $7.14 in EPS (up 38%), and operating margins climbing to 43%, even as Meta dropped another $3.9 billion into Reality Labs, a business arm that only Zuckerberg seems to actually care about (and one that investors have all but given up trying to model a payback from, but tolerate because ad margins are so rich). Meta has quietly built a solid AI stack -- from custom silicon to open-source LLMs -- and insists these investments will eventually unlock entirely new revenue streams, from assistant bots to smart glasses to enterprise APIs. The timeline? Flexible. The price tag? Rising. But if this is a bet on Meta's future as an AI-first company, it's being bankrolled by the past. Jeffries analysts wrote in a Thursday note that AI "enabled greater efficiency gains across Meta's ad ecosystem," calling out the AI-powered recommendation model for ads. That's Wall Street speak for: The dog food ads are getting harder to skip, and Meta's getting paid more when you click. "Facebook is the digital advertising juggernaut," said Motley Fool senior investment analyst David Meier. "You have three and a half billion people touching one of your apps every day. You're able to find ways now using AI tools to help you do it. You're finding ways to get 11% more ad impressions in front of all those people. You have such an effective ad algorithm that generates conversions that you can structure higher prices than last year." Advertising isn't sexy, but it pays the bills -- and then some. That creates a strange tension: Zuckerberg seems to want to frame Meta as a cutting-edge AI company... while still depending almost entirely on the same business the company ran on a decade ago. Meta's flashy AI models could one day shape the future, but right now, it's the company's tried-and-true algorithm quietly placing ads between Instagram Reels that is funding Meta's attempted reinvention. "They are the monster," Meier said. "They have the platform. They have the company they want. They have people willing to see ads, and advertisers get those ads to convert, I mean, they just keep printing money." Wall Street likes results, and Meta gave them plenty. Revenue beat expectations by 6%, operating income by $3.4 billion. Wedbush called the upside "magnitude," while Deutsche Bank praised Meta for flagging "durable top-line growth." All four banks raised their price targets to between $920 and $950. William Blair analysts noted the "massive" quarter in an analyst note and wrote that "the company is demonstrating that it can profitably scale the business while making massive capital investments. ... We continue to be positive on its AI adoption and benefits to advertisers and believe Meta will be a long-term AI leader." Analysts from across the board echoed a similar sentiment: Meta's ad dominance gives it runway to spend -- and win. Jefferies sees the capital expenditures surge as a sort of strategic moat, praising Meta for capital investments that are "well aligned with [long-term] growth initiatives." Wedbush said that "the infusion of AI capabilities across the company's ad stack and content recommendation engines are driving tangible results." Deutsche Bank noted Meta is "leaning in to foundational AI model training work, which is unlocking new vertically integrated opportunities." And Cantor Fitzgerald echoed that framing, adding that the company is "well-positioned with capital, infrastructure, and talent to achieve the next technological breakthroughs." But the checks aren't blank forever, and there could be growing concerns about just how sustainable Meta's investment pace really is. The company isn't just guiding toward $72 billion this year; it's already forecasting another jump in capital expenditures next year, with chief financial officer Susan Li suggesting spending could ramp up to $100 billion. Cantor warned that the "stakes on AI-game theory" between megacaps could lead to runaway spending. And before too long, Meta might have to prove the other side of its AI equation: not just building infrastructure, but monetizing it. But Wall Street doesn't seem too stressed. "While the scale of these ambitions is vast, and requires significant investments that have a longer-dated payback horizon, we contend that these capital investments are also having strong returns in terms of engagement and ad performance, which is translating to Meta's current durable advertising revenue growth, while simultaneously affording Meta the ability to be a leading player in both hardware and AI advances," Deutsche Bank analysts wrote. "Given this mix of near-term tailwinds, alongside longer-term strategic advances (with ample greenfield opportunities), we contend that Meta deserves a premium valuation multiple vs peers." For now, Meta's advertising business gives the company carte blanche while it claims the future will be kind to -- and profitable for -- the company. Still, that's a lot of pressure on one cash cow. "It is shocking that I'm getting ready to say I could easily see Meta doubling in five years," Meier said. "Growing 15% a year for the next five years, based on how the company is performing now, is not a stretch." At the moment, Meta sits close to a $2 trillion market cap, meaning Meier's back-of-the-envelope math lands somewhere near $4 trillion by the end of the decade. If the AI bets pay off? That number could be bigger -- and faster. Of course, forecasts are easy when the revenue keeps flowing. The test for Meta is whether it can generate entirely new demand, not just squeeze more margin from an already mature business. Regulators are still watching the company closely. The Department of Justice's long-running antitrust investigation could threaten Meta's ability to consolidate data across its properties or, in a worst-case scenario, force divestitures of Instagram or WhatsApp. Meta also faces internal friction. Employee churn in the company's AI teams has been high, and its much-hyped Llama Behemoth model has been delayed (and reportedly isn't all that good) -- the kind of technical hiccup that analysts notice. Then there's the hardware wildcard: Meta's bet on smart glasses as the next big computing platform. Zuckerberg says the form factor is the future, but history hasn't exactly been kind to wearable hype. "The other thing that's going to be incredible to see in this next space where Meta is making these investments -- in people, infrastructure, technology, development -- is: How is all that going to come together?" Meier said. "Because, again, think about the price tag. $200 billion is going to flow out of the company, and [Zuckerberg] wants to generate a return on that. We as investors get a front-row seat to, OK, how is this all going to play out? "If it works, they're going to be writing Harvard Business School cases about all of this." That may sound optimistic, but it's not necessarily unfounded. Meta's models are improving. Its compute fleet is growing. Its monetization tools are working. And if AI does usher in a platform shift -- if search, productivity, commerce, and devices all reconfigure around bots and assistants -- Meta could be well-positioned to profit. Still, this is a bet. And an expensive one. As Deutsche Bank said, Meta is "affording [itself] the ability" to be a leading player in both hardware and AI. That's a subtle but crucial distinction. Meta hasn't won yet. Right now, it's still paying to stay in the race. Whether Meta is building the future or just buying time, the one thing the company is definitely doing is spending -- a lot.

US tech titan earnings rise on AI as economy roils

Tech giants Amazon, Apple, Meta and Microsoft this week eclipsed earnings expectations, cashing in on artificial intelligence (AI) while navigating economic waters roiled by US tariffs. "Massive results seen by Microsoft and Meta further validate the use cases and unprecedented spending trajectory for the AI Revolution on both the enterprise and consumer fronts," Wedbush tech analyst Dan Ives said in a note to investors. "We have barely scratched the surface of this 4th Industrial Revolution now playing out around the world led by the Big Tech stalwarts such as Nvidia, Microsoft, Palantir, Meta, Alphabet, and Amazon," Ives added. Amazon reported a 35% jump in quarterly profits as the e-commerce giant said major investments in AI technology are paying off. "Our conviction that AI will change every customer experience is starting to play out," said Chief Executive Andy Jassy, pointing to the company's expanded Alexa+ service and new AI shopping agents. But the Seattle-based company's profit outlook for the current quarter came in lower than hoped for, with investors worried that the cost of AI was weighing on the bottom line. This was despite a stellar second quarter that exceeded analyst expectations, much like it did for its AI-focused rivals Google, Microsoft and Meta, which posted bumper results for the period. Amazon's net sales climbed 13%, signaling that the company was so far surviving impacts of the high-tariff trade policy under US President Donald Trump. Amazon Web Services (AWS), the company's world-leading cloud computing division, led the charge with sales jumping 17.5% to $30.9 billion. Its strong performance reflects surging demand for cloud infrastructure to power AI applications, a trend that has benefited major cloud providers as companies race to adopt generative AI technologies. $4 trillion club Shares of Microsoft spiked Thursday following blowout quarterly results, lifting the tech giant into the previously unprecedented $4 trillion club along with Nvidia, another AI standout. The landmark valuation is the latest sign of growing bullishness about an AI investment boom that market watchers believe is still in the early stages -- even as companies like Microsoft plan $100 billion or more in annual capital spending to add new capacity. "Cloud and AI is the driving force of business transformation across every industry and sector," said Microsoft CEO Satya Nadella. At the heart of the results was a stunning surge in Azure, the company's cloud computing platform, which is getting "supercharged" with AI, said Angelo Zino, technology analyst at CFRA Research. Zino attributed "just about all of" Microsoft's recent climb in valuation to AI. Superintelligence? Meta reported robust second-quarter financial results Wednesday, with revenue jumping 22% year-over-year as the social media giant continues investing heavily in artificial intelligence. "We've had a strong quarter both in terms of our business and community," said CEO Mark Zuckerberg. "I'm excited to build personal superintelligence for everyone in the world." Zuckerberg has embarked on a major AI spending spree, poaching top researchers with expensive pay packages from rivals like OpenAI and Apple as he builds a team to pursue what he calls AI superintelligence. Hours before the earnings report, Zuckerberg insisted that the attainment of superintelligence -- technology that would theoretically be more powerful than the human brain -- is now "in sight." Meanwhile Apple, which is seen as lagging in the AI race, beat expectations with earnings driven by strong iPhone sales despite US tariffs costing the company $800 million in the recently-ended quarter. Apple expects Trump's tariffs to cost the iPhone maker $1.1 billion in the current quarter. "The results show that Apple's iPhone strategy is working to offset the impact of looming challenges with AI development timelines, tariff pressures, and Google's antitrust issues," said Emarketer tech analyst Jacob Bourne. Apple chief executive Tim Cook said on an earnings call that taking the most advanced technologies and making them easy to use is "at the heart of our AI strategy." Cook said Apple has been rolling out Apple Intelligence AI features and is "making good progress on a more personalized Siri."

Meta beats expectations sending share price soaring

San Francisco (United States) (AFP) - Meta reported robust second-quarter financial results Wednesday, with revenue jumping 22 percent year-over-year to $47.5 billion as the social media giant continues investing heavily in artificial intelligence. The Facebook and Instagram owner's share price soared as much as 12 percent in after-hours trading, with investors buoyed by the company's growing advertising business and a rise in users across its family of platforms. "We've had a strong quarter both in terms of our business and community," said CEO Mark Zuckerberg. "I'm excited to build personal superintelligence for everyone in the world." Meta posted a net profit of $18.3 billion, compared with $13.5 billion in the same period last year. The results exceeded Wall Street expectations as advertising revenue climbed a stellar 21 percent to $46.6 billion. Meta's Family of Apps segment, which includes Facebook, Instagram, WhatsApp and Messenger, saw daily active users reach 3.48 billion in June, up 6 percent from a year earlier. The company significantly increased its capital expenditures to $17 billion in the quarter, primarily for AI infrastructure investments. Meta projects total 2025 capital spending between $66 billion and $72 billion. Zuckerberg has embarked on a major AI spending spree, poaching top researchers with expensive pay packages from rivals like OpenAI and Apple as he builds a team to pursue what he calls AI superintelligence. "To win the superintelligence race requires the best of the best talent and Meta's been on a roll when it comes to recruiting top AI talent. Money talks and Meta has plenty of it," said Forrester research director Mike Proulx. The big question is whether Wall Street will continue backing the expensive strategy. Meta is locked in a bitter rivalry with other tech behemoths as they invest heavily in AI, aiming to ensure the technology benefits society and generates profits in the not-so-distant future. Most analysts believe Meta will make the investment pay off by improving its advertising efficiency and creating new opportunities, such as with its smart glasses through a partnership with Ray-Ban maker EssilorLuxottica. "Capital expenditures are still shockingly high, but with these strong results, Meta has bought itself more time with investors," said Debra Aho Williamson, chief analyst at Sonata Insights. However, others signal that Meta's AI spending spree needs a clearer sense of direction. A strong quarter "won't shield Meta from questions concerning the company's future as it breathlessly tries to keep up in the AI race," said Emarketer analyst Minda Smiley. Another reason that Zuckerberg's spending bonanza may raise eyebrows is because it echoes his previous leap into spending vast amounts on virtual reality and entering the metaverse, with the CEO even changing the company's name from Facebook to Meta to reflect the strategy change. The bleeding continued in that segment, with the Reality Labs division, Meta's virtual and augmented reality unit, posting significant losses. The unit lost $4.5 billion in the quarter on revenue of just $370 million, highlighting ongoing challenges in the metaverse business. 'Undeniable' Zuckerberg's AI team is headed by Alexandr Wang, the former CEO of Scale AI, a startup in which Meta invested $14.3 billion at the beginning of the company's spending blitz in June. Hours before the earnings report, Zuckerberg insisted that the attainment of superintelligence is now "in sight." In a post outlining Meta's AI strategy, Zuckerberg signaled that the remainder of the decade would be a transformative period for artificial intelligence development and that the company's priority was to bring AI to its users. "There's no other company that is as good as us at taking something getting it in front of billions of people," he told analysts.

US tech titan earnings rise on AI as economy roils

San Francisco (United States) (AFP) - Tech giants Amazon, Apple, Meta and Microsoft this week eclipsed earnings expectations, cashing in on artificial intelligence (AI) while navigating economic waters roiled by US tariffs. "Massive results seen by Microsoft and Meta further validate the use cases and unprecedented spending trajectory for the AI Revolution on both the enterprise and consumer fronts," Wedbush tech analyst Dan Ives said in a note to investors. "We have barely scratched the surface of this 4th Industrial Revolution now playing out around the world led by the Big Tech stalwarts such as Nvidia, Microsoft, Palantir, Meta, Alphabet, and Amazon," Ives added. Amazon reported a 35 percent jump in quarterly profits as the e-commerce giant said major investments in AI technology are paying off. "Our conviction that AI will change every customer experience is starting to play out," said Chief Executive Andy Jassy, pointing to the company's expanded Alexa+ service and new AI shopping agents. But the Seattle-based company's profit outlook for the current quarter came in lower than hoped for, with investors worried that the cost of AI was weighing on the bottom line. This was despite a stellar second quarter that exceeded analyst expectations, much like it did for its AI-focused rivals Google, Microsoft and Meta, which posted bumper results for the period. Amazon's net sales climbed 13 percent, signaling that the company was so far surviving impacts of the high-tariff trade policy under US President Donald Trump. Amazon Web Services (AWS), the company's world-leading cloud computing division, led the charge with sales jumping 17.5 percent to $30.9 billion. Its strong performance reflects surging demand for cloud infrastructure to power AI applications, a trend that has benefited major cloud providers as companies race to adopt generative AI technologies. $4 trillion club Shares of Microsoft spiked Thursday following blowout quarterly results, lifting the tech giant into the previously unprecedented $4 trillion club along with Nvidia, another AI standout. The landmark valuation is the latest sign of growing bullishness about an AI investment boom that market watchers believe is still in the early stages -- even as companies like Microsoft plan $100 billion or more in annual capital spending to add new capacity. "Cloud and AI is the driving force of business transformation across every industry and sector," said Microsoft CEO Satya Nadella. At the heart of the results was a stunning surge in Azure, the company's cloud computing platform, which is getting "supercharged" with AI, said Angelo Zino, technology analyst at CFRA Research. Zino attributed "just about all of" Microsoft's recent climb in valuation to AI. Superintelligence? Meta reported robust second-quarter financial results Wednesday, with revenue jumping 22 percent year-over-year as the social media giant continues investing heavily in artificial intelligence. "We've had a strong quarter both in terms of our business and community," said CEO Mark Zuckerberg. "I'm excited to build personal superintelligence for everyone in the world." Zuckerberg has embarked on a major AI spending spree, poaching top researchers with expensive pay packages from rivals like OpenAI and Apple as he builds a team to pursue what he calls AI superintelligence. Hours before the earnings report, Zuckerberg insisted that the attainment of superintelligence -- technology that would theoretically be more powerful than the human brain -- is now "in sight." Meanwhile Apple, which is seen as lagging in the AI race, beat expectations with earnings driven by strong iPhone sales despite US tariffs costing the company $800 million in the recently-ended quarter. Apple expects Trump's tariffs to cost the iPhone maker $1.1 billion in the current quarter. "The results show that Apple's iPhone strategy is working to offset the impact of looming challenges with AI development timelines, tariff pressures, and Google's antitrust issues," said Emarketer tech analyst Jacob Bourne. Apple chief executive Tim Cook said on an earnings call that taking the most advanced technologies and making them easy to use is "at the heart of our AI strategy." Cook said Apple has been rolling out Apple Intelligence AI features and is "making good progress on a more personalized Siri."

Meta's stock makes sharp gains on blowout earnings results - SiliconANGLE

Meta Platforms Inc. easily beat Wall Street's expectations as it posted its second-quarter financial results today, and its shares gained more than 11% in extended trading. The company reported earnings before certain costs such as stock compensation of $7.14 per share, while revenue for the period was up 22% to $47.52 billion. Those numbers shattered expectations, with Wall Street looking for a mere $5.92 per share in earnings and $44.8 billion in sales. That was primarily due to the strong performance of Meta's advertising business, which generates virtually all of its revenue. Second-quarter ad sales came to $46.56 billion in the quarter, topping Wall Street's projection of $43.97 billion. All told, Meta posted a net income of $18.33 billion in the quarter, up from a profit of $13.46 billion in the year-ago period. On a conference call with analysts, Meta Chief Executive Mark Zuckerberg (pictured) said the real reason for the company's success is its artificial intelligence technology, which has helped to unlock "greater efficiency and gains across our ad system". The social media giant also offered a strong forecast for the current quarter, saying it expects third-quarter sales of between $47.5 billion and $50.5 billion, well ahead of Wall Street's target of $46.14 billion. In addition, it said it's going to increase its spending There was encouraging growth in terms of daily active people, which measures the total user base across all of Meta's applications, including Facebook, Instagram, WhatsApp and Threads. It ended the quarter with 3.48 billion daily active people, up from 3.43 billion three months ago and ahead of the Street's forecast of 3.45 billion. The only real disappointment was, again, Meta's Reality Labs unit, which is tasked with developing the virtual reality and augmented reality technologies that Zuckerberg has previously pinned so much hope on for the companies' future growth. For now, it remains very much a money pit, registering an operating loss of $4.53 billion in the quarter, while generating just $370 million in revenue. Meta said its total costs and expenses during the quarter came to $27.08 billion, up 12% from the same period one year earlier. The company also adjusted its forecast for capital expenditure in fiscal 2025, saying it now expects to spend between $66 billion and $72 billion this year, increasing the lower end of its previous estimate of $64 billion to $72 billion. The main reason for the rising capex is compensation related to hiring, which is set to follow data center infrastructure spending as the "second-largest driver of growth." In recent weeks, the company has gone all-out in its efforts to hire some of the best AI talents in the business, primarily through a series of very expensive "acqui-hires". It kicked things off in June when it invested $14.3 billion into the data labeling company Scale AI Inc. in a deal that saw the company's CEO Alexandr Wang jump ship. Wang is now co-leading Meta's new Superintelligence Labs as its Chief AI Officer, heading up its efforts to create "artificial general intelligence", which is loosely defined as an AI system that surpasses the intellectual capabilities of humans. Following Wang, Meta then swooped in to recruit the former GitHub CEO Nat Friedman, who played a key role in developing the popular coding bot Github CoPilot. Earlier this month, it further expanded its AI team, hiring Safe Superintelligence Inc. CEO Daniel Gross. According to Meta, both Friedman and Gross will join Wang in the new Superintelligence Labs unit. It's thought that Zuckerberg chose to embark on an AI hiring spree after the company's most recent flagship large language model, Llama 4, received only a lukewarm response from developers. Prior to the earnings report, he published a letter outlining his vision of "personal superintelligence", saying that he believes the technology should be focused more on "personal empowerment", rather than increasing productivity and automation. Zuckerberg expanded on this in response to a question from an analyst on the call, saying that superintelligence will empower people to be "more creative, develop culture and communities, connect with each other and lead more fulfilling lives." The CEO said he has already seen glimpses of how the company's AI systems are improving themselves, and although the progress has been slow, it is "undeniable", he stated. "Developing superintelligence, which we define as AI that surpasses human intelligence in every way we think, is now in sight," he promised. When asked about the company's spending on data center infrastructure, Meta Chief Financial Officer Susan Li said she is exploring ways that it can work with financial partners to co-develop new facilities. Her comments come after a report last month that Meta is seeking to raise $29 billion in funding to build out its data centers. "We don't have any finalized transactions to announce, but we generally believe that there will be models here that will attract significant external financing to support large-scale data center projects that are developed using our ability to build world-class infrastructure," Li said.

Meta bets on 'superintelligence' as revenues jump 22pc

As Mark Zuckerberg set out his vision for AI and Meta's drive for 'superintelligence', the Facebook parent company saw revenues up 22pc in quarter two. As the company beat analysts' forecasts with a 22pc increase in revenue for the second quarter, Meta yesterday signalled that its spending blitz on AI would increase into 2026, as it vies to catch up on the other major players. Zuckerberg also published a personal letter that sets out his views on 'superintelligence'. Shares jumped by more than 10pc, as the markets appeared to like the numbers, and the commitment to continued AI investment. The $47.5bn Q2 revenues were well above Wall Street estimates of around $44.8bn, while profits were up 36pc year-on-year to $18.3bn. But it is that commitment to continue its AI spending blitz that is appealing to many of the analysts, as Meta said the rate of increase in spending would rise next year, given the need to build data centres to power the AI drive, and ongoing recruitment of the best AI talent. In its CFO commentary, Meta said Q3 revenues were forecast in the $47.5 to €50.5bn range, again well ahead of target. "While we are not providing an outlook for fourth quarter revenue, we would expect our year-over-year growth rate in the fourth quarter of 2025 to be slower than the third quarter as we lap a period of stronger growth in the fourth quarter of 2024," said CFO Susan Li in her commentary. "The largest single driver of growth will be infrastructure costs, driven by a sharp acceleration in depreciation expense growth and higher operating costs as we continue to scale up our infrastructure fleet," said Li. "Aside from infrastructure, we expect the second largest driver of growth to be employee compensation as we add technical talent in priority areas." "Weccurrently expect another year of similarly significant capital expenditures dollar growth in 2026 as we continue aggressively pursuing opportunities to bring additional capacity online to meet the needs of our artificial intelligence efforts and " Not only has Meta made demonstrable strides with AI, but it's helping to future proof itself as a growth company, should its family of apps get affected by the current anti-trust case or changing social media sentiment," said Mike Proulx, Forrester VP research director. Meanwhile in his letter advocating for a world "empowered" by AI, Zuckerberg himself added a note of caution. "The rest of this decade seems likely to be the decisive period for determining the path this technology will take, and whether superintelligence will be a tool for personal empowerment or a force focused on replacing large swaths of society," he said, reflecting the ongoing debate on the prevalence of AI. "Meta says it "will need to be rigorous about mitigating these risks and careful about what we choose to open source" but many companies are vying feverously to win the superintelligence race," said Forrester's Proulx. "But at what cost are they willing to do so? Mere trust in companies to do the right thing just isn't going to cut it." Don't miss out on the knowledge you need to succeed. Sign up for the Daily Brief, Silicon Republic's digest of need-to-know sci-tech news.

Meta shares surge as AI investment pays off

Shares in Meta, the tech firm behind Facebook and Instagram, have surged in extended trading after posting a bumper set of financial results that eased concerns it was lagging rivals in the artificial intelligence (AI) race. The stock was up 11% after it reported figures covering the second quarter that smashed analysts' expectations in almost every metric. The numbers were also seen as justifying chief executive and founder Mark Zuckerberg's huge spending - long a source of frustration for many Meta investors seeking greater rewards in the short term. Money latest: Chain offers free sushi for kids over holidays He told a call with analysts that the company expected to spend up to $72bn this year - and even more in 2026. At the same time, AI rival Microsoft revealed capital expenditure plans that would see its investment surpass $120bn if sustained over the year. Meta has been investing in people to power its AI-driven growth and infrastructure to grow advertising sales. Zuckerberg told analysts his pursuit of superintelligence - a hypothetical concept where AI surpasses human intelligence in every possible way - was paying off. In the second quarter, AI-powered ad recommendations drove about 5% more conversions - a purchase or commitment - on Instagram and 3% on Facebook, the company said. It helped Meta report revenue of $47.5bn for the three months to the end of June. Profit per share of $7.14 also easily exceeded analysts' estimates. Meta recently introduced an AI-driven image-to-video ad creation tool under its Advantage+ suite, allowing marketers to generate video ads from static images. The company said that, as a result, it was forecasting up to $50bn of revenue in the current third quarter of the year - way above the consensus expectation around $46bn. Commenting on the performance Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: "Meta has knocked it out of the park. Pick your metric and Meta crushed it, from ad revenue growth to daily users, all the way down to the profit lines. "AI is clearly delivering real-world benefits for advertisers, and they're willing to pay more as a result. Average price per ad was up 9% over the quarter, a clear indication that Meta is delivering an improved product for both users and advertisers. "The broader focus now turns to Meta's mammoth AI investment plans and whether it can continue to manage those costs without hurting earnings or free cash flow. "CFO commentary called out higher costs next year, and another year of similar capex growth, which many analysts did not have on their bingo cards. Clearly, all this spending adds some near-term risks to the bottom line, but Meta looks set to be a clear winner in the AI space over the longer term."

Meta stock surges after Q2 results blow past expectations despite heavy AI spending

In the midst of an artificial intelligence spending spree, Meta posted stronger-than-expected results for the second quarter, buoyed by growing ad revenue even as its expenses increased. Shares of Meta Platforms Inc. surged more than 9% after-hours as a result. The Menlo Park, California-based company earned $18.34 billion, or $7.14 per share, in the April-June period. That's up 36% from $13.47 billion, or $5.16 per share, in the same period a year earlier. Revenue jumped 22% to $47.52 billion from $39.07 billion. Analysts expected Meta to earn $5.88 per share on revenue of $44.81 billion, according to a poll by FactSet. Meta said it expects costs to increase as it spends billions on infrastructure and luring highly compensated employees as it works on its AI ambitions. It's forecasting 2025 expenses to be in the range of $114 billion to $118 billion, up 20% to 24% year-over-year.

Meta stock surges after Q2 results blow past expectations despite heavy AI spending

In the midst of an artificial intelligence spending spree, Meta posted stronger-than-expected results for the second quarter, buoyed by growing ad revenue even as its expenses increased In the midst of an artificial intelligence spending spree, Meta posted stronger-than-expected results for the second quarter, buoyed by growing ad revenue even as its expenses increased. Shares of Meta Platforms Inc. surged more than 9% after-hours as a result. The Menlo Park, California-based company earned $18.34 billion, or $7.14 per share, in the April-June period. That's up 36% from $13.47 billion, or $5.16 per share, in the same period a year earlier. Revenue jumped 22% to $47.52 billion from $39.07 billion. Analysts expected Meta to earn $5.88 per share on revenue of $44.81 billion, according to a poll by FactSet. Meta said it expects costs to increase as it spends billions on infrastructure and luring highly compensated employees as it works on its AI ambitions. It's forecasting 2025 expenses to be in the range of $114 billion to $118 billion, up 20% to 24% year-over-year.

Meta shares jump after strong third-quarter sales forecast

Gift 5 articles to anyone you choose each month when you subscribe. Meta Platforms topped projections for second-quarter sales and gave a stronger-than-expected forecast for the current period, a sign that the social media company's advertising business is still growing quickly enough to support aggressive spending on artificial intelligence. Shares jumped as much as 10 per cent in late trading. Third-quarter sales will be $US47.5 billion ($73.8 billion) to $US50.5 billion, Meta said in a statement on Wednesday (Thursday AEST), with the midpoint of that range exceeding the average analyst estimate of $US46.2 billion, according to data compiled by Bloomberg.

Meta Stock Surges After Q2 Results Blow Past Expectations Despite Heavy AI Spending

In the midst of an artificial intelligence spending spree, Meta posted stronger-than-expected results for the second quarter, buoyed by growing ad revenue even as its expenses increased. Shares of Meta Platforms Inc. surged more than 9% after-hours as a result. The Menlo Park, California-based company earned $18.34 billion, or $7.14 per share, in the April-June period. That's up 36% from $13.47 billion, or $5.16 per share, in the same period a year earlier. Revenue jumped 22% to $47.52 billion from $39.07 billion. Analysts expected Meta to earn $5.88 per share on revenue of $44.81 billion, according to a poll by FactSet. Meta said it expects costs to increase as it spends billions on infrastructure and luring highly compensated employees as it works on its AI ambitions. It's forecasting 2025 expenses to be in the range of $114 billion to $118 billion, up 20% to 24% year-over-year.

Mark Zuckerberg Has Convinced Wall Street to Buy Into His AI Ambitions

Want more stock market and economic analysis from Phil Rosen directly in your inbox? Subscribe to Opening Bell Daily's newsletter. Mark Zuckerberg is diverting more and more of Meta's unlimited budget into AI and Wall Street just keeps applauding. After trading closed Wednesday, the Facebook parent company reported blowout earnings that sent its stock 12 percent higher after hours: Meta also slightly raised its capex guidance by $2 billion, and now expects to spend between $66 billion and $72 billion for the year. Meta's AI-fueled ad engine -- bolstered by improved targeting and conversion rates -- helped fuel the business and share prices over the last quarter. Meanwhile, its novel smart glasses tripled sales compared to a year ago. All of the above has helped Meta outperform most of its AI peers the last year with a 50 percent rally. Notably, Meta CFO Susan Li addressed the company's recent AI hiring spree, nodding to its hefty compensation packages for top talent. "Aside from infrastructure, we expect the second-largest driver of growth to be employee compensation as we add technical talent in priority areas and recognize a full year of compensation expenses for employees hired throughout 2025," Li said in a statement. "We expect these factors will result in a 2026 year-over-year expense growth rate that is above the 2025 expense growth rate." Investors, for their part, are now treating Meta's massive spending as a calculated play, rather than a hype-driven gamble. Zuckerberg's $14.3 billion stake in Scale AI as well as his willingness to throw cash at new hires underscores Meta's interest in dominating the AI race. Those ambitions have coincided with actual revenue momentum, making it easier for Wall Street to buy into the vision and harder for analysts to question big spending plans. The final deadline for the 2025 Inc. Power Partner Awards is Friday, August 8, at 11:59 p.m. PT. Apply now.

What Analysts Think of Meta Stock Ahead of Earnings

Meta's AI spending plans will be in focus after its rival, Google parent Alphabet, raised its 2025 capital expenditures projection by $10 billion. Meta Platforms (META) is scheduled to report second-quarter results after the closing bell Wednesday, with analysts overwhelmingly bullish on the tech giant as it invests heavily in AI. Of the 27 analysts covering Meta who are tracked by Visible Alpha, 25 have a "buy" or equivalent rating for the stock, alongside two "hold" ratings. Their consensus price target near $755 implies 5% upside over Monday's close just above $717. Meta's AI infrastructure spending plans will be in focus, particularly after Google parent Alphabet (GOOGL) last week raised its projected 2025 capital expenditures to $85 billion from $75 billion. Meta has said it expects to spend $64 billion to $72 billion in capex this year, a figure Wells Fargo analysts said earlier this month they expect to reach $76.7 billion in 2026. Meta is "taking decisive action to fortify its AI bets," the bank wrote, raising its price target to $783 from $664. "The market has received the investments favorably, but expectations for the returns also [are] rising." CEO Mark Zuckerberg has been on an AI hiring spree lately, even getting personally involved in recruiting talent for Meta's "Superintelligence" unit. The company reportedly offered a pay package valued at more than $200 million to lure an Apple (AAPL) executive in charge of AI models, and its other recent hires have included former Github CEO Nat Friedman and ex-Scale AI CEO Alexandr Wang. Analysts on average expect Meta to report second-quarter revenue of $44.83 billion, up 15% year-over-year, and net income of $15.21 billion, or $5.90 per share, gaining from $13.47 billion, or $5.16 per share, a year earlier.

Meta Reports Earnings Today. Here's What Traders Expect the Stock To Do

Meta Platforms (META) is set to report second-quarter results after the market closes today, with traders anticipating the stock could test record highs following the report. Current options pricing suggests traders expect the Facebook and Instagram parent's stock could move more than 5% in either direction from its recent levels near $701 by the end of the week. The high end of that range would put Meta shares just above their record close at $738.09 on June 30. At the low end, the stock could slip to $664. Since the start of this year, Meta stock has gained about a fifth of its value. Meta shares have moved roughly 4% the day after releasing its quarterly results in three of its last four quarters, with one smaller move of about 1.5% after fourth-quarter results were reported in January. Last quarter, shares rose as the tech giant topped estimates and committed to its plans to spend tens of billions of dollars on artificial intelligence efforts, evidenced by Meta's reported recent hiring spree for a new "superintelligence" division with nine-figure offers to some AI developers and executives. Wall Street analysts are largely bullish on Meta stock, with 25 of the 27 analysts tracked by Visible Alpha calling it a "buy," along with just two "hold" ratings. Their average target near $755 would mark another record high. Meta is expected to report rising revenue and profits as it invests heavily in AI. Analysts have said that signs of returns on Meta's AI investments will be a key area of focus for investors after the company made several high-profile hires to support its AI goals.

Here's Why Meta's Earnings Were Better-Than-Expected, According to CEO Mark Zuckerberg

Meta reported $47.52 billion in revenue for its second quarter ending in June on Wednesday, a 22% year-over-year increase and higher than the $44.8 billion analysts expected. On Thursday, Meta stock reached a record high of $784.75, surpassing the previous record close of $738.09 reached on June 30. Meta CEO Mark Zuckerberg stated on a call on Wednesday with analysts that growth in the quarter was caused by the use of Meta's AI technology, which allowed the company to drive more advertising revenue. Nicola Mendelsohn, head of global business group at Meta, echoed Zuckerberg's remarks. In a LinkedIn post on Wednesday, Mendelsohn wrote that the quarter's "strong performance was driven largely by AI, unlocking greater efficiency and gains across our ads system." Related: Mark Zuckerberg Uses an Easy But Powerful Formula to Keep Facebook Relevant -- Here's How It Works At the time of writing, Meta's market value was $1.96 trillion, up about 11.5% on Thursday morning. One contributor to Meta's surge in revenue was smart glasses. Meta released the Ray-Ban Meta frames in partnership with eyewear company EssilorLuxottica in October 2023. The device allows users to take photos, interact with Meta AI, and make calls. The glasses have sold more than two million pairs since launch, with EssilorLuxottica revealing in its earnings report earlier this week that sales of the frames more than tripled for the first half of the year compared to the same time last year. The unexpected success of the Ray-Ban Metas prompted Meta to launch another pair, this time in partnership with Oakley, last month. Related: Mark Zuckerberg Revealed His Vision for Smart Glasses at Meta Connect -- and It Involves Holograms: 'Beginning of a Big Thing' During Meta's second-quarter earnings call, Zuckerberg predicted that smart glasses would replace other gadgets as the "primary computing device," becoming the main method users interact with AI. "I continue to think that glasses are basically going to be the ideal form factor for AI," Zuckerberg said on the call. While Meta brought in more revenue than expected last quarter, the tech giant is also projecting to spend more on AI expenses. Meta stated in the earnings report Wednesday that capital expenditures, including AI-related costs and payments on financial leases, would cost at least $66 billion this year, up from a previous forecast of at least $64 billion. Expenditures for the quarter were $17 billion. Related: Here's How Meta's AI Superintelligence Effort Is Different From 'Others in the Industry,' According to Mark Zuckerberg's New Blog Post Before the earnings report was revealed, Zuckerberg penned a blog post about his vision for AI -- to bring superintelligence, or AI that surpasses human intellect, into the hands of every individual. The Meta CEO said he aims to give people "greater agency" to shape the world, contrasting his approach with "others in the industry" who believe that AI should first automate all work before humanity lives on a measured amount of its output. Meta has heavily invested in superintelligence, offering new hires up to $200 million in compensation packages. Last month, Meta announced a new Superintelligence Labs team, assembling talent from AI companies like OpenAI, Google, and Anthropic to work on the effort.

Meta stock surges after Q2 results blow past expectations despite heavy AI spending - The Economic Times

Meta's artificial intelligence spending spree appears to be paying off with investors, who sent the company's stock soaring after hours on Wednesday following a blowout quarterly earnings report. The Menlo Park, California-based company easily beat Wall Street's expectations for the second quarter, helped by higher advertising revenue and a growing user base on its flagship social media platforms. The money is helping to fund the company's massive investments in AI development and hiring top talent at eye-popping compensation levels. "Not only has Meta made demonstrable strides with AI, but it's helping to future proof itself as a growth company, should its family of apps get affected by the current anti-trust case or changing social media sentiment," said Forrester research director Mike Proulx. Meta is facing an antitrust case that's now awaiting a judge's decision and could force the company to break off WhatsApp and Instagram, startups Meta bought more than a decade ago that have since grown into social media powerhouses. The company earned $18.34 billion, or $7.14 per share, in the April-June period. That's up 36% from $13.47 billion, or $5.16 per share, in the same period a year earlier. Revenue jumped 22% to $47.52 billion from $39.07 billion. Analysts expected Meta to earn $5.88 per share on revenue of $44.81 billion, according to a poll by FactSet. Meta said it expects costs to increase as it spends billions on infrastructure and luring highly compensated employees as it works on its AI ambitions. It's forecasting 2025 expenses to be in the range of $114 billion to $118 billion, up 20% to 24% year-over-year. In the latest demonstration of his AI enthusiasm, CEO Mark Zuckerberg on Wednesday posted a note detailing his views on "personal superintelligence" that he believes will "help humanity accelerate our pace of progress." While he said that developing superintelligence is now "in sight," he did not detail how this will be achieved or exactly what "superintelligence" means. "Meta's vision is to bring personal superintelligence to everyone. We believe in putting this power in people's hands to direct it towards what they value in their own lives," Zuckerberg wrote. "This is distinct from others in the industry who believe superintelligence should be directed centrally towards automating all valuable work, and then humanity will live on a dole of its output." Meta's shares rose $64.48, or 9.3%, to $759.7 in after-hours trading after closing at $695.21.

Big Tech may be breaking the bank for AI, but investors love it - The Economic Times

AI played a bigger role in driving demand across internet search, digital advertising and cloud computing in the April-June quarter, powering revenue growth at technology giants Microsoft, Meta, and Alphabet.Big Tech is spending more than ever on artificial intelligence - but the returns are rising too, and investors are buying in. AI played a bigger role in driving demand across internet search, digital advertising and cloud computing in the April-June quarter, powering revenue growth at technology giants Microsoft, Meta, and Alphabet. Betting that momentum will sustain, Microsoft and Alphabet decided to ramp up spending to ease capacity shortages that have limited their ability to meet soaring AI services demand, even after several quarters of multi-billion-dollar outlays. The results offer the clearest sign yet that AI is emerging as a primary growth engine, although the monetization journey is still in its early days, investors and analysts said. The upbeat commentary also bodes well for Amazon.com , the largest US cloud provider, which will report earnings on Thursday after markets close, and underscores how surging demand for the new technology is shielding the tech giants from tariff-driven economic uncertainty hobbling other sectors. "As companies like Alphabet and Meta race to deliver on the promise of AI, capital expenditures are shockingly high and will remain elevated for the foreseeable future," said Debra Aho Williamson, founder and chief analyst at Sonata Insights. But if their core businesses remain strong, "it will buy them more time with investors and provide confidence that the billions being spent on infrastructure, talent and other tech-related expenses will be worthwhile," she added. Microsoft shares were 9% higher in extended trading on Wednesday, putting the Windows maker on track to cross $4 trillion in market value - a milestone only chip giant Nvidia has reached so far. Meta was up even more, rising 11.7% and on course to add nearly $200 billion to its market value of $1.75 trillion. Amazon gained over 3%. All the companies have faced intense scrutiny from investors over their ballooning capital expenditures, which were expected to total $330 billion this year before the latest earnings. And until a few days ago, the Magnificent Seven stocks were also trailing the S&P 500 in year-to-date performance. Silencing doubts Microsoft said on Wednesday it would spend a record $30 billion in the current quarter, after better-than-expected sales and an above-estimate forecast for its Azure cloud computing business showcased the growing returns on its massive AI bets. The prediction puts Microsoft on track to potentially outspend its rivals over the next year. It came after Google-parent Alphabet beat revenue expectations and raised its spending forecast by $10 billion to $85 billion for the year. Microsoft also disclosed for the first time the dollar figure for Azure sales and the number of users for its Copilot AI tools, whose adoption has long been a concern for investors. It said Azure generated more than $75 billion in sales in its last fiscal year, while Copilot tools had over 100 million users. Overall, around 800 million customers use AI tools peppered across Microsoft's sprawling software empire. "It's the kind of result that quickly silences any doubts about cloud or AI demand," said Josh Gilbert, market analyst at eToro. "Microsoft is more than justifying its spending." Other AI companies have also attracted a clutch of users. Alphabet said last week its Gemini AI assistant app has more than 450 million monthly active users. OpenAI's ChatGPT, the application credited with kicking off the generative AI frenzy, has around 500 million weekly active users. Meta, meanwhile, raised the bottom end of its annual capital expenditure forecast by $2 billion, to a range of between $66 billion and $72 billion. It also said that costs driven by its efforts to catch up in Silicon Valley's intensifying AI race would push 2026 expense growth rate above 2025's pace. Better-than-expected sales growth in the April-June period and an above-estimate revenue forecast for the current quarter, however, assured investors that strength in the social media giant's core advertising business can support the massive outlays. "The big boys are back," said Brian Mulberry, portfolio manager at Zacks Investment Management, which holds shares in all three major US cloud providers. "This simply proves the Magnificent Seven is still magnificent at this moment in time."

US stock futures hit record peaks as Meta, Microsoft results get AI boost - The Economic Times

Futures tied to the S&P 500 and Nasdaq surged to record highs on Thursday after strong earnings from tech giants Meta and Microsoft reinforced investor confidence that artificial intelligence investments are paying off. Meta Platforms soared 11.5% in premarket trading after the social media giant forecast third-quarter revenue well above estimates, thanks to AI boosting its core advertising business. Microsoft issued a record capital spending outlook of $30 billion for the current quarter and reported higher-than-expected sales in its Azure cloud computing business. The stock surged 8.3%. Other tech heavyweights such as Amazon and Nvidia also climbed 3.2% and 1.6%, respectively, while Microsoft was on track to hit a $4 trillion market capitalization for the first time. At 05:53 a.m. ET, Dow E-minis were up 151 points, or 0.34%, Nasdaq 100 E-minis were up 302.5 points, or 1.29%, and S&P 500 E-minis were up 60.5 points, or 0.95%. The Wall Street indexes are also set for monthly gains amid easing trade tensions and renewed enthusiasm around AI. On Wednesday, the S&P 500 and blue-chip Dow ended lower as Federal Reserve Chair Jerome Powell diluted investor expectations for an interest rate cut in September after the central bank kept rates unchanged, as widely expected. Powell said it was too early to predict a September rate cut, adding that current policy is not restricting the economy. The statement came after stronger-than-expected GDP data for the second quarter. Data on Personal Consumption Expenditure (PCE) - the Fed's preferred inflation gauge - for June is due to be released at 08:30 a.m. ET. Traders see a 56.8% chance for a September rate cut, according to the CME Group's FedWatch tool. Investors also braced for Friday's non-farm payrolls data and tariff deadline set by U.S. President Donald Trump, who has vowed to not grant any extension to trading partners that fail to secure a deal. EU officials said European liquor could face 15% tariffs from August 1 until a different agreement is reached, with talks set to continue in the fall. Trump announced a trade deal with South Korea on Wednesday, setting an import tariff of 15% for the Asian country, down from a threatened 25%. However, caution prevailed after he threatened to impose a 25% tariff on India, even as the two nations remain at the negotiating table. In other stocks, Applied Digital soared 26% after the data center operator surpassed estimates for quarterly revenue, thanks to AI-driven demand for its cloud infrastructure.

US stock futures hit record peaks as Meta, Microsoft results get AI boost

Futures tied to the S&P 500 and Nasdaq surged to record highs on Thursday after strong earnings from tech giants Meta and Microsoft reinforced investor confidence that artificial intelligence investments are paying off. Meta Platforms soared 11.5% in premarket trading after the social media giant forecast third-quarter revenue well above estimates, thanks to AI boosting its core advertising business. Microsoft issued a record capital spending outlook of $30 billion for the current quarter and reported higher-than-expected sales in its Azure cloud computing business. The stock surged 8.3%. Other tech heavyweights such as Amazon and Nvidia also climbed 3.2% and 1.6%, respectively, while Microsoft was on track to hit a $4 trillion market capitalization for the first time. At 05:53 a.m. ET, Dow E-minis were up 151 points, or 0.34%, Nasdaq 100 E-minis were up 302.5 points, or 1.29%, and S&P 500 E-minis were up 60.5 points, or 0.95%. The Wall Street indexes are also set for monthly gains amid easing trade tensions and renewed enthusiasm around AI. On Wednesday, the S&P 500 and blue-chip Dow ended lower as Federal Reserve Chair Jerome Powell diluted investor expectations for an interest rate cut in September after the central bank kept rates unchanged, as widely expected. Powell said it was too early to predict a September rate cut, adding that current policy is not restricting the economy. The statement came after stronger-than-expected GDP data for the second quarter. Data on Personal Consumption Expenditure (PCE) - the Fed's preferred inflation gauge - for June is due to be released at 08:30 a.m. ET. Traders see a 56.8% chance for a September rate cut, according to the CME Group's FedWatch tool. Investors also braced for Friday's non-farm payrolls data and tariff deadline set by U.S. President Donald Trump, who has vowed to not grant any extension to trading partners that fail to secure a deal. EU officials said European liquor could face 15% tariffs from August 1 until a different agreement is reached, with talks set to continue in the fall. Trump announced a trade deal with South Korea on Wednesday, setting an import tariff of 15% for the Asian country, down from a threatened 25%. However, caution prevailed after he threatened to impose a 25% tariff on India, even as the two nations remain at the negotiating table. In other stocks, Applied Digital soared 26% after the data center operator surpassed estimates for quarterly revenue, thanks to AI-driven demand for its cloud infrastructure.

Meta shares surge 10% on strong Q2 2025 earnings beat and bullish revenue forecast

Meta Platforms Inc. reported impressive Q2 2025 earnings, exceeding Wall Street's forecasts and triggering a stock rally. The company's revenue reached $47.52 billion, with EPS at $7.14, driven by strong advertising performance and despite significant AI investments. Meta anticipates continued growth, projecting Q3 revenue between $47.5 billion and $50.5 billion, fueled by its AI ambitions and expanding user base. Meta Platforms Inc. delivered a robust earnings report for the second quarter of 2025, significantly surpassing Wall Street expectations and fueling a more than 10% rally in its after-hours stock trading. The company's strong performance comes amid heavy investments in artificial intelligence infrastructure and talent acquisition, demonstrating that these expenditures have yet to impact its profitability or investor confidence. Key financial highlights: Meta also raised its guidance for the third quarter of 2025, projecting revenue between $47.5 billion and $50.5 billion, comfortably above analysts' consensus estimate of $46.23 billion. The midpoint of the forecast sits around $49 billion, about 6% higher than expectations, underscoring confidence in continued growth. Investments and AI ambitions The company continues to double down on artificial intelligence, with major capital investments and a strategic hiring spree that includes poaching top AI researchers from competitors. Capital expenditures for 2025 are now expected to be between $66 billion and $72 billion, up from a prior range of $64 billion to $72 billion. Meta's CFO, Susan Li, highlighted that infrastructure costs related to AI initiatives will remain a significant expense driver moving forward. CEO Mark Zuckerberg emphasized AI's strategic role in Meta's future, describing ambitions to bring "personal superintelligence" to nearly 3.5 billion users across Facebook, Instagram, WhatsApp, and Messenger. He envisions AI empowering individuals with tools to better shape their world, distinguishing Meta's vision from competitors that focus on centralized automation. Meta's solid earnings beat and optimistic forecast sent its shares soaring by more than 9% during after-hours trading. This marks the tenth consecutive quarter that Meta has exceeded earnings expectations and the twelfth quarter of revenue surpassing estimates, a streak that reflects strong execution despite competitive and technological challenges.

US tech titan earnings rise on AI as economy roils - The Economic Times

Amazon, Apple, Meta, and Microsoft all beat earnings expectations, boosted by strong AI investments. Microsoft and Meta saw major gains, with Microsoft hitting a $4 trillion valuation. Amazon's profits rose 35%, while Apple managed solid iPhone sales despite heavy US tariffs. AI spending remains a key focus across all firms.Tech giants Amazon, Apple, Meta and Microsoft this week eclipsed earnings expectations, cashing in on artificial intelligence (AI) while navigating economic waters roiled by US tariffs. "Massive results seen by Microsoft and Meta further validate the use cases and unprecedented spending trajectory for the AI Revolution on both the enterprise and consumer fronts," Wedbush tech analyst Dan Ives said in a note to investors. "We have barely scratched the surface of this 4th Industrial Revolution now playing out around the world led by the Big Tech stalwarts such as Nvidia, Microsoft, Palantir, Meta, Alphabet, and Amazon," Ives added. Amazon reported a 35% jump in quarterly profits as the e-commerce giant said major investments in AI technology are paying off. "Our conviction that AI will change every customer experience is starting to play out," said chief executive Andy Jassy, pointing to the company's expanded Alexa+ service and new AI shopping agents. But the Seattle-based company's profit outlook for the current quarter came in lower than hoped for, with investors worried that the cost of AI was weighing on the bottom line. This was despite a stellar second quarter that exceeded analyst expectations, much like it did for its AI-focused rivals Google, Microsoft and Meta, which posted bumper results for the period. Amazon's net sales climbed 13%, signaling that the company was so far surviving impacts of the high-tariff trade policy under US President Donald Trump. Amazon Web Services (AWS), the company's world-leading cloud computing division, led the charge with sales jumping 17.5% to $30.9 billion. Its strong performance reflects surging demand for cloud infrastructure to power AI applications, a trend that has benefited major cloud providers as companies race to adopt generative AI technologies. $4 trillion club Shares of Microsoft spiked Thursday following blowout quarterly results, lifting the tech giant into the previously unprecedented $4 trillion club along with Nvidia, another AI standout. The landmark valuation is the latest sign of growing bullishness about an AI investment boom that market watchers believe is still in the early stages -- even as companies like Microsoft plan $100 billion or more in annual capital spending to add new capacity. "Cloud and AI is the driving force of business transformation across every industry and sector," said Microsoft CEO Satya Nadella. At the heart of the results was a stunning surge in Azure, the company's cloud computing platform, which is getting "supercharged" with AI, said Angelo Zino, technology analyst at CFRA Research. Zino attributed "just about all of" Microsoft's recent climb in valuation to AI. Superintelligence? Meta reported robust second-quarter financial results Wednesday, with revenue jumping 22% year-over-year as the social media giant continues investing heavily in artificial intelligence. "We've had a strong quarter both in terms of our business and community," said CEO Mark Zuckerberg. "I'm excited to build personal superintelligence for everyone in the world." Zuckerberg has embarked on a major AI spending spree, poaching top researchers with expensive pay packages from rivals like OpenAI and Apple as he builds a team to pursue what he calls AI superintelligence. Hours before the earnings report, Zuckerberg insisted that the attainment of superintelligence -- technology that would theoretically be more powerful than the human brain -- is now "in sight." Meanwhile Apple, which is seen as lagging in the AI race, beat expectations with earnings driven by strong iPhone sales despite US tariffs costing the company $800 million in the recently-ended quarter. Apple expects Trump's tariffs to cost the iPhone maker $1.1 billion in the current quarter. "The results show that Apple's iPhone strategy is working to offset the impact of looming challenges with AI development timelines, tariff pressures, and Google's antitrust issues," said Emarketer tech analyst Jacob Bourne. Apple chief executive Tim Cook said on an earnings call that taking the most advanced technologies and making them easy to use is "at the heart of our AI strategy." Cook said Apple has been rolling out Apple Intelligence AI features and is "making good progress on a more personalized Siri."

Meta's Strong Revenues May Offset Concerns Over Soaring AI Investments: Analyst - Meta Platforms (NASDAQ:META)

Meta Platforms META is poised for a significant market focus on its expanding artificial intelligence initiatives, with increasing investments in AI talent and infrastructure signaling a strategic pivot. The company's aggressive push into advanced AI development is driving elevated revenue and earnings per share estimates for the upcoming quarters, despite the potential for rising operating expenses. Bank of America Securities analyst Justin Post, who reiterated a Buy rating on Meta Platforms on Friday with a price forecast of $775, anticipates the company's second-quarter earnings call will prominently feature its expanding AI initiatives. Also Read: Meta Hits 1 Billion Monthly AI Users, Eyes Future With Subscriptions Post highlighted key developments such as Meta's $14 billion investment in Scale AI, recent reports of delays concerning the Llama 4 model, and the formation of Meta's dedicated Super Intelligence team, all of which underscore a deepening commitment to advanced AI development. Meta Platforms is anticipated to report strong second-quarter revenue, which Post believes could alleviate concerns regarding its significant AI spending. He further noted Meta's aggressive recruitment of top-tier AI professionals, offering competitive compensation packages that could contribute to an uptick in operating expenses. Post raised its second-quarter estimates, projecting revenue and GAAP EPS of $45.4 billion and $6.12, respectively, above Street estimates of $44.6 billion and $5.84. The analyst expects 8% growth in ad revenue, with foreign exchange providing a positive tailwind. He noted buy-side expectations landing between $45.5 and $46 billion, above the high end of Meta's $42.5 and $45.5 billion guidance. Trending Investment OpportunitiesAdvertisementArrivedBuy shares of homes and vacation rentals for as little as $100. Get StartedWiserAdvisorGet matched with a trusted, local financial advisor for free.Get StartedPoint.comTap into your home's equity to consolidate debt or fund a renovation.Get StartedRobinhoodMove your 401k to Robinhood and get a 3% match on deposits.Get Started For the third quarter, Post forecasted $46.9 billion in revenue and $6.20 in EPS, ahead of the Street's $45.9 billion and $5.91. The analyst expects Meta to guide within a $44.5-$47.5 billion range and see ad revenue continuing to benefit from AI-driven improvements like automated campaigns, CRM integration, and rising monetization across Threads, WhatsApp, and messaging. Post noted that despite the AI hiring ramp, Meta has room within its 2025 expense guide of $113-$118 billion. The analyst estimated $27.8 billion in second-quarter expenses, with higher capex potentially driven by data center expansion and AI infrastructure needs. Post also expects Meta to benefit from new tax laws and R&D credits, possibly improving 2025 free cash flow by $4-5 billion. The analyst noted Meta as one of the strongest long-term AI opportunities, with substantial revenue upside as AI tools integrate into the ad stack. For full-year 2025, Post forecasted $190 billion in revenue and $26.83 in EPS (vs Street at $187 billion and $25.61). However, he cautioned that investor expectations are high heading into the print, especially with the stock up 22% year-to-date and trading at 24.5 times 2026 EPS. Price Action: META stock is trading higher by 0.55% to $716.50 at last check Monday. Read Next: How Amazon's Price War Is Crushing Temu's US Comeback Photo via Shutterstock METAMeta Platforms Inc$716.770.57%Stock Score Locked: Edge Members Only Benzinga Rankings give you vital metrics on any stock - anytime. Unlock RankingsEdge RankingsMomentum85.83Growth92.71Quality90.39Value27.26Price TrendShortMediumLongOverviewMarket News and Data brought to you by Benzinga APIs

Mark Zuckerberg Burns A $32 Billion Hole In Meta's Wallet Through Aggressive AI Investments For A 72% Drop

This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy. Facebook parent Meta's shares jumped by 12% today after the firm reported a solid quarter yesterday and smashed analyst revenue and EPS estimates out of the park. During its second quarter, Meta earned $47.52 billion in revenue and $7.14 in earnings per share, which were significantly higher than the analyst estimates of $44.80 billion and $5.92. The firm also guided $47.5 billion to $50.5 billion in revenue for the third quarter, the lower end of which was more than a billion dollars higher than $46.14 billion of analyst estimates. However, while the firm topped up its earnings by also raising the low end of its capital expenditure guidance to $64 billion from an earlier $62 billion, its balance sheet shows that it burned through an unbelievable $32 billion in cash during 2025's first half. During Meta's earnings call, CFO Susan Li shared that Meta's capital expenditure in 2025 mark a roughly $30 billion increase over 2024 and added that while "the infrastructure planning process remains highly dynamic, we currently expect another year of similarly significant capex dollar growth in 2026 as we continue aggressively pursuing opportunities to bring additional capacity online to meet the needs of our AI efforts and business operations." A deeper look at Meta's balance sheet shows that the firm is already absorbing the impact of its AI investments. Not only has Meta been on a spending spree this year, after having spent $14.3 billion to buy ScaleAI and set up its Superintelligence Lab, but CEO Mark Zuckerberg has also pledged hundreds of billions of dollars in investment to build massive AI data centers. Meta's balance sheet shows that as of June 30th, 2025, the firm had $12 billion in cash and cash equivalents. This marked a stunning 72% drop over the firm's cash position as of December 31st, as the firm spent $32 billion during the first six months of the year. Crucially, during the first quarter, Meta had spent $15 billion, which indicates that its cash burn accelerated during Q2. A deeper look into the firm's cash flow statement shows that its net cash from operating activities was outpaced by the net cash from investing activities. A cash flow statement measures the tangible inflows and outflows during a quarter, and within it, cash flows for investing show the outflows made by a firm for growth. During the second quarter, Meta generated $25.6 billion through its operations but ended up spending $26 billion for investment purposes. Within its investment cash outflows, $16.5 billion, or 63%, were for purchases of property and equipment. While Meta did generate $14.2 billion through securities, the firm nevertheless spent $15 billion in equity investments - a charge that likely reflects its investment in ScaleAI. Over the year-ago quarter, the Q2 investment cash outflows mark a 104% jump. While Meta's stock has gained 29% year-to-date in 2025, it dropped by 64% in 2022 after Zuckerberg burned through tens of billions of dollars in trying to create a metaverse. However, the rise of the AI hype in 2023 allowed the Meta CEO to pivot and court investors by spending billions of dollars on data centers instead.

Meta's AI Isn't Just Smart -- It's Paying The Bills - Meta Platforms (NASDAQ:META)

Meta Platforms Inc META just dropped a blowout second quarter -- but the real headline isn't the numbers, it's the algorithm. According to JPMorgan's Doug Anmuth, Meta's AI isn't just writing code or generating Llama buzz. It's quietly monetizing user attention and paying for the next leap: Superintelligence. Track META stock's post-earnings move here. AI That Converts While You Scroll Meta's second-quarter revenue surged 22%, powered by a sharp uptick in ad pricing (+9%) and impressions (+11%). At the core of this momentum are Meta's AI ranking tools -- Andromeda, GEM, and Lattice -- which are optimizing ad delivery across Instagram and Facebook, noted Anmuth. GEM alone boosted conversions by 5% on Instagram (IG); Lattice lifted Facebook (FB) conversions by 4%. Time spent watching video on IG and FB also jumped more than 20% year-over-year, thanks to smarter feed curation. Read Also: Chamath Palihapitiya Laid Out A Short Case Against Meta, Alphabet In 2020 -- Both Have Since Rallied Over 160% Despite a bumpy rollout of Llama 4 and some AI team reshuffling, Meta's ad engine didn't flinch. Advantage+, its automated ad platform, drove stronger-than-expected returns, and Asia-based advertisers came roaring back. The result: a business that's humming, even as the spotlight shifts to AGI ambitions. Super Capex For Superintelligence While AI is monetizing today's engagement, Meta is prepping for something bigger -- and much more expensive. Management hinted at a jaw-dropping $100 billion capex target in 2026, up sharply from this year's $66 billion-$72 billion. That investment will go toward compute-heavy infrastructure to support its vision of personal superintelligence. For now, Meta's strong ad business gives it the financial runway to spend aggressively. But as Anmuth notes, the company remains compute-constrained and is eyeing co-development partnerships to stay flexible. Investors are rewarding the monetization story, but the stakes are rising fast. If Meta's AI can keep converting engagement into dollars, it might just earn the right to chase the future. Read Next: Chamath Palihapitiya Weighs In On Meta's AI Ambitions As Energy Bottlenecks Emerge As The True Limiter Photo: Shutterstock METAMeta Platforms Inc$773.8011.3%Stock Score Locked: Edge Members Only Benzinga Rankings give you vital metrics on any stock - anytime. Unlock RankingsEdge RankingsMomentum83.07Growth92.93Quality87.91Value31.98Price TrendShortMediumLongOverviewMarket News and Data brought to you by Benzinga APIs

Meta, Microsoft, Google Are Unleashing A $240 Billion AI Tsunami - Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL), Meta Platforms (NASDAQ:META)

The AI revolution is officially a $240 billion spending spree. Meta Platforms Inc META, Microsoft Corp MSFT and Alphabet Inc's GOOGL GOOG Google are pouring unprecedented capital into AI infrastructure, igniting what Wedbush analyst Dan Ives calls a "watershed moment" for technology. The KraneShares Artificial Intelligence & Technology ETF AGIX tracks the price movement of AI stocks, as can be seen here. This tidal wave of investment -- expected to exceed $240 billion combined over 2025 and 2026 -- signals that the tech giants are not just chasing AI hype, but building the unstoppable engine behind the next industrial revolution. Read Also: Meta's AI Empire Grows -- Fueled By OpenAI, DeepMind, Apple Defectors $250 Billion: The AI Cloud Arms Race According to JPMorgan analyst Samik Chatterjee, the three cloud giants are aggressively expanding capex to fuel AI. Meta alone is guiding for nearly $100 billion in capital expenditures in 2026, focused on servers, data centers, and networking. Google raised its 2025 capex outlook to $85 billion, accelerating server deployments and datacenter builds. Meanwhile, Microsoft's September quarter capex hit $30 billion+, implying a possible annualized spend north of $100 billion if trends hold. Taking into account (and leaving room for caution), these investments suggest a combined two-year AI infrastructure war chest exceeding $250 billion -- a massive leap that validates the sector's growth potential. This capital race not only builds the backbone for AI but also creates spillover opportunities for hardware, software, and infrastructure companies. AI's Golden Age: More Room To Run Wedbush analyst Dan Ives sees this massive spending as proof that AI's growth runway is far from over. "We're only at 10 pm in the AI party," he says, with the "party" expected to last until 4 am -- meaning years of explosive growth remain. With $2 trillion forecasted in enterprise and government AI spending over the next three years, tech titans like Meta, Microsoft, and Alphabet are laying the digital railroads for the next century. JPMorgan analysts add that the real financial upside may lie with the less obvious players -- those with leverage to AI infrastructure spending. In particular, they highlight companies like Amphenol Corp APH, Arista Networks Inc ANET, Celestica Inc CLS, Ciena Corp CIEN, Coherent Corp COHR, Flex Ltd FLEX, Jabil Inc JBL, and Lumentum Holdings Inc LITE as under-the-radar beneficiaries. According to the analysts, these companies are poised to experience pronounced earnings momentum as AI capital expenditures (capex) flow downstream into servers, interconnects, and optical components. Read Next: Meta's AI Isn't Just Smart -- It's Paying The Bills Photo: Shutterstock GOOGLAlphabet Inc$193.80-1.39%Stock Score Locked: Edge Members Only Benzinga Rankings give you vital metrics on any stock - anytime. Unlock RankingsEdge RankingsMomentum62.93Growth67.59Quality81.42Value51.36Price TrendShortMediumLongOverviewMETAMeta Platforms Inc$777.8011.9%MSFTMicrosoft Corp$538.084.84%AGIXKraneShares Artificial Intelligence & Technology ETF$32.991.77%ANETArista Networks Inc$125.582.86%APHAmphenol Corp$107.331.74%CIENCiena Corp$94.982.18%CLSCelestica Inc$208.823.17%COHRCoherent Corp$110.803.33%FLEXFlex Ltd$50.48-1.16%GOOGAlphabet Inc$194.80-1.34%JBLJabil Inc$225.60-0.36%LITELumentum Holdings Inc$113.473.29%Market News and Data brought to you by Benzinga APIs

After a 700% Rally Over the Last 3 Years, This Magnificent Artificial Intelligence (AI) Stock Looks Poised For Even More Monster Gains | The Motley Fool

Three years ago, shares of Meta Platforms (META -2.29%) hit a low around $89 as the company's ambitious plans to conquer the metaverse appeared to be rooted more in fantasy than reality. To add some perspective, Meta stock had not traded anywhere near those levels for almost a decade. The precipitous decline in Meta stock was a clear signal from Wall Street and retail investors that sentiment hadn't just soured, but that enthusiasm surrounding the company's future was nearly non-existent. Nevertheless, Meta's CEO, Mark Zuckerberg, did what many successful entrepreneurs before him have done. He remained grounded, worked collaboratively with a supporting cast of executives, and developed a path forward to win over investors again. Spoiler alert: His plan has worked (so far). Over the last three years, Meta stock has climbed from $89 per share to roughly $718 as of this writing (July 25). While a 700% return might suggest that Meta's best days are behind it, I think the ride is just getting started. Let's dive into how Meta turned around its situation, and explore why the company's pivot from the metaverse to artificial intelligence (AI) should have investors more excited than ever. The chart below illustrates trends across Meta's operating expenses, capital expenditures (capex), and cash flow from operations per employee over the last several years. Throughout 2021 and 2022, operating expenses ballooned as Meta invested aggressively in its Reality Labs division. These investments included new lines of wearable glasses, and upgrades to the company's virtual reality headset, Meta Quest. While these new products garnered some interest at first, overall enthusiasm eventually waned. Reality Labs is a non-profitable segment within Meta's overall business and is often perceived as a cash strain on the company's high-margin advertising empire. In 2023, Meta's management declared a "year of efficiency" during which the company made dramatic cost reductions. As the company cut the excess from an inflated cost profile, Meta reallocated its savings into a new area of focus: AI. As the chart above illustrates, Meta has remained disciplined in its approach to spending since its reductions over the last couple of years. Although capex has been rising, these investments in AI infrastructure could be seen as much higher-margin than prior moonshots on the metaverse. Strong unit economics in the form of rising cash flow per employee suggest that Meta's investments in the AI realm have (so far) helped drive more productivity and efficiency from employees and provided the company with robust operating leverage. I think the current price action surrounding Meta stock reflects a feeling of validation around the company's cost-cutting efforts and strategic pivot to AI. With that said, I am not convinced that Meta stock is priced to perfection just yet. Per the estimates below, it's clear that Wall Street is calling for even further revenue acceleration and profit margin expansion for Meta over the next few years as the company unlocks new sources of AI-driven growth. Since the company's investment in Scale AI and the subsequent creation of Meta Superintelligence Labs (MSL) are yet to bear fruit, I'm cautiously optimistic that the estimates above may wind up being conservative in hindsight. In other words, I do not think the forecast above fully (or accurately) captures the accretive effect that Scale AI or MSL could have on Meta's business at scale. For these reasons, I think Meta remains a compelling buy-and-hold opportunity for investors with a long-term time horizon.

Should You Buy Meta Platforms Stock Before July 30? Wall Street Has a Clear Answer for Investors. | The Motley Fool

Most Wall Street analysts see upside in Meta Platforms stock ahead of the company's second-quarter earnings report. The "Magnificent Seven" stocks have delivered mixed performances year to date, but shares of Meta Platform (META 0.64%) have gained 22% due to strong financial results and positive investor sentiment concerning its artificial intelligence (AI) strategy. The company will announce second-quarter earnings results after market close on Wednesday, July 30. Wall Street is optimistic ahead of the report. Among 72 analysts, the stock has a consensus rating of buy, and the median target price is $750. That implies 5% upside from its current share price of $712. Here's what investors should know about Meta Platforms. Meta Platforms will announce financial results for Q2 2025 after the U.S. stock market closes on Wednesday, July 30. Management guided for 12.6% sales growth but didn't share an earnings estimate. The consensus forecasts among Wall Street analysts are listed below: Meta stock may not rise even if the company beats the consensus estimates and provides strong forward guidance. The company checked both boxes in Q3 2024, but the stock still declined 4% following the report due to concerns about heavy spending on AI projects. As of July 28, prices on options contracts imply a post-earnings move of 5.5%. In that scenario, the stock would close between $674 and $751 on July 31. But that range is subject to change, depending on how the stock trades in the days before the report. More importantly, while options prices are used to estimate volatility, there's no guarantee the estimates are accurate. The risk premiums on options contracts simply reflect what investors anticipate. Meta owns 3 of the 4 most popular social media platforms in Facebook, Instagram, and WhatsApp, as measured by total downloads last year. It also owns the sixth most popular social platform (Threads) and the eighth most popular social platform (Messenger), according to Sensor Tower. That ability to engage consumers and collect data makes Meta Platforms an ideal advertising partner. Consequently, Meta Platforms is one of the largest ad tech companies in the world, second only to Alphabet's Google, but Meta is gaining market share. It accounted for 21.6% of digital ad spending last year, up two points from the previous year. Market-share gains could continue as Meta leans on artificial intelligence to improve user engagement and help marketers optimize their advertising campaigns. CEO Mark Zuckerberg recently told analysts, "In the last six months, improvements to our recommendation systems have led to a 7% increase in time spent on Facebook, 6% increase on Instagram, and 35% increase on Threads." Also, the number of advertisers using AI creative tools increased 30% in the most recent quarter. Zuckerberg reported growing traction with the conversational assistant Meta AI. The technology has nearly reached 1 billion active users across its ecosystem of social media platforms. Finally, the company recently announced new AI features that let brands personalize the same ad for different people, embed conversational AI agents into ads, and stitch together static images into cohesive video ads. Looking ahead, Grand View Research estimates ad tech spending will grow at 14% annually through 2030. In turn, Wall Street expects Meta Platform's earnings to grow at 15% annually in the next three years. That makes its current valuation of 28 times earnings look tolerable. However, analysts have a tendency to underestimate the company. Meta Platforms beat the consensus estimate by an average of 13% in the last six quarters and may continue to top forecasts as it leans into AI innovation and new products. For instance, Meta dominates the burgeoning smart glasses market, which tripled in size last year, and sales are projected to increase more than 60% annually through 2029, according to Counterpoint Research. Patient investors should feel comfortable buying Meta stock. With the second-quarter financial report imminent, the most prudent strategy is to buy a few shares today and a few more shares after the report. That strategy will smooth out some of the share-price volatility, ensuring investors capitalize on any post-earnings gains, while also hedging against potential post-earnings losses.

Meta Earnings: Spending Big on AI | The Motley Fool

Meta Platforms easily beat analyst expectations in the second quarter. Revenue was up 22% year over year to $47.5 billion, and earnings per share soared 38% to $7.14. The number of daily active people across the company's products rose by 6% to 3.48 billion, ad impressions shot up 11%, and average price per ad jumped 9%. While Meta's advertising business is churning out record revenue and profits, the company is focused on the heavy investments necessary to make its artificial intelligence (AI) superintelligence push a reality. "I'm excited to build personal superintelligence for everyone in the world," said CEO Mark Zuckerberg in the earnings release. Meta spent just over $17 billion on capital expenditures during the second quarter, double what it spent in the same period last year. For 2025, the company said it now expects to pour between $64 billion and $72 billion into capex, up $30 billion from 2024. Meta also expects a similar increase in capex in 2026 as the company races to build out AI computing capacity. Meta grew its total expenses by just 12% in the second quarter, which contributed to the company's rapid earnings growth. Next year, infrastructure costs are expected to push up total expenses significantly, particularly depreciation and employee compensation for AI-related roles. Meta has made headlines recently by reportedly attempting to poach AI experts with massive pay packages. Even with the heavy capital spending, Meta is still producing copious amounts of free cash flow, although that metric is contracting. Free cash flow was $8.55 billion in the second quarter, down about 22% year over year. Shares of Meta were up around 9% in after-hours trading on Wednesday as investors digested the company's strong results and spending plans. Meta's core advertising business is booming, boosting profits even as the company ramps up spending and investments in its AI initiatives. Going into the second-quarter report, Meta stock was up almost 19% year to date. Meta expects to generate revenue between $47.5 billion and $50.5 billion in the third quarter, with the year-over-year growth rate then slowing in the fourth quarter. Total expenses are now expected to rise by 20% to 24% in 2025, reflecting the company's growth plans. Meta is betting big on AI and superintelligence, plowing tens of billions of dollars into AI infrastructure and top AI talent. Investors will need to hope that this effort goes better than the company's previous splashy bets on the Metaverse.

As Mark Zuckerberg Focuses on "Personal Superintelligence," Meta Smashes Quarterly Expectations

TNT Sports Quadruples Down on Savannah Bananas, Will Televise Banana Ball Championship Meta is now firmly focused on artificial intelligence, but its core business is still booming. The tech giant handily topped Wall Street expectations in its Q2 earnings report Wednesday, with revenue surging 22 percent year over year to $47.5 billion, and net income up 36 percent to $18.3 billion. Family daily active people across its platforms, which include Facebook, Instagram and WhatsApp were 3.48 billion on average for June 2025, an increase of 6 percent year-over-year, with ad impressions and the average cost per ad also rising. The earnings report was released a few hours after Meta CEO Mark Zuckerberg released a letter outlining his vision for "personal superintelligence." "Meta's vision is to bring personal superintelligence to everyone. We believe in putting this power in people's hands to direct it towards what they value in their own lives," Zuckerberg wrote, adding that "if trends continue, then you'd expect people to spend less time in productivity software, and more time creating and connecting. Personal superintelligence that knows us deeply, understands our goals, and can help us achieve them will be by far the most useful." "We've had a strong quarter both in terms of our business and community," said Zuckerberg in a statement alongside the earnings report. "I'm excited to build personal superintelligence for everyone in the world."

Meta Earnings - Zuckerberg Says AI Superintelligence Now In Sight

AI superintelligence, or AI that is smarter than human beings, was a feasible possibility, claimed Meta CEO Mark Zuckerberg during the company's latest quarterly earnings call. He stated that the technology was likely to shape the company's systems within the next few years. The company established Meta Superintelligence Labs to work on the project, as well as a new lab dedicated to developing new Meta AI models. Meta has been aggressively hiring to staff its AI developments teams, as a report from the WIRED revealed. The tech giant's CFO Susan Li stated during the call that they expected employment compensation to be the second biggest driver of expenses through the year. During the call, Meta claimed to have made significant improvements to their advertising platforms, which bring in the majority of the revenue for the company. It upgraded the Andromeda model, which picks the most relevant and personalised ads. These upgrades increased conversions by 4% on Facebook mobile Feed and Reels. They also enhanced their GEM system (Generative Ads Recommendation System), which ranks ads after Andromeda selects them. Meta scaled up training capacity, added Instagram engagement data, and used new modelling techniques that let the system look at twice as much user history when choosing ads. This boosted conversions by 5% on Instagram and 3% on Facebook Feed and Reels. Furthermore, Meta expanded their Lattice model architecture, which replaced many smaller, specialised ad models with larger ones. After deploying the architecture in April 2025, the company saw ad conversions rise by nearly 4% across Facebook Feed and Reels. The tech giant also rolled out AI-powered campaign creation tools for advertisers, which include video generation features used by over 2 million advertisers - mostly among small and medium scale businesses. The company also expressed concerns about the regulatory atmosphere in the European Union (EU). Earlier this year, the European Commission found Meta to be in violation of the Digital Markets Act (DMA), which requires companies to allow users to provide less data and still receive a service of equivalent standard. The dispute hinged over Meta's 'Consent or Pay' advertising model, which gave EU users a choice - allow Meta to process their data to offer personalised advertising or pay a monthly subscription fee. The Commission found this model to be in violation of the DMA as it did not allow users to select a more privacy-preserving option and still get an equivalent service. Meta executives stated that while the tech giant is incorporating the Commission's feedback, if the regulatory body decides to ask for further changes to Meta's strategy, the company may feel an impact on its European revenue. Meta pulled in $47.5 billion in revenue between April and June 2025, marking a year-over-year (YoY) growth of 22%. The company however incurred $27 billion in expenses in the quarter ended June 2025, a 12% YoY growth. It also earned $20.4 billion as operational income at a margin of 43%. Meanwhile, net income came out to be $18.3 billion, growing 36% YoY. Elsewhere, Meta's cost of revenue was $8.4 billion in the quarter ended June 2025, with $12.9 billion spent on research and development (R&D). Marketing and sales activities cost $2.9 billion in the latest quarter, and general administrative costs came out to be $2.6 billion. As mentioned earlier, advertising brought in the bulk of the revenue at $46.5 billion in the latest quarter, an increase of 21% YoY. Revenue from other sources within Meta's family of apps, including WhatsApp paid messaging and Meta verified subscriptions, was $4.7 billion for the quarter ended June 2025. Elsewhere, Reality Labs - which is Meta's VR development division - brought in only $370 million, while incurring a loss of $4.5 billion this quarter. Notably, Meta's daily active users for its family of apps (Facebook, Instagram, WhatsApp and Messenger), averaged at 3.48 billion in June 2025, growing 6% YoY. Ad impressions increased by 11% YoY, while average price per ad increased by 9% for the corresponding time period.

Mark Zuckerberg's Meta surges as Facebook parent's revenue soars on...

Meta Platforms narrowed its annual capital expenditures forecast on Wednesday, driven by the social media giant's high-stakes push for "superintelligence" in the heated AI race, sending its shares up nearly 9% in extended trading. The Facebook and Instagram parent now expects capital expenditures to be between $66 billion and $72 billion, compared with its prior projection of $64 billion and $72 billion. The move follows a similar announcement by Big Tech rival Alphabet, which last week raised its capital spending outlook by $10 billion to $85 billion on the back of strong AI-driven growth in its search and cloud businesses. Second-quarter revenue rose 22% to $44.5 billion, beating estimates. Profit surged 36% to $18.3 billion. Training and deploying advanced AI systems remain a capital-intensive endeavor, requiring costly hardware, massive computing resources and top-tier engineering talent. After a lackluster reception for its Llama 4 model that led to staff departures, Meta has tried to revitalize its AI push by sparking a high-stakes talent war that has seen it dole out more than $100 million pay packages to researchers from rival firms. CEO Mark Zuckerberg has pledged to spend hundreds of billions of dollars to build massive AI data centers, having shelled out $14.3 billion for a stake in startup Scale AI and poached its 28-year-old billionaire CEO Alexandr Wang. To fund the push, the billionaire founder is leaning on Meta's massive user base as well as AI-powered improvements in content engagement that make it a stable bet for advertisers even in times of economic uncertainty. The social media giant recently introduced an AI-driven image-to-video ad creation tool under its Advantage+ suite, allowing marketers to generate video ads from static images. Instagram, whose Reels product competes with ByteDance's TikTok and YouTube Shorts for ad dollars in the popular short video format, is set to account for more than half of Meta's ad revenue in the US this year, according to research firm eMarketer. Meta has also accelerated efforts to monetize its social media platforms WhatsApp and Threads by integrating ads. The company last month named insider Connor Hayes as head of Threads, a sign it was moving the platform away from Instagram's shadow after leaning on the photo-sharing app for growth.

Meta Stock Climbs 12% After Strong Q2 Performance and AI Strategy

In his statement, the CEO also introduced the company's long-term vision of 'personal superintelligence.' This concept involves developing smart, personalized AI assistants to enhance creativity, productivity, and social interactions. The goal is to embed AI deeper into daily life across Meta's platforms, making it indispensable for users. CFO Susan Li warned of increased expenses in 2026, mainly due to hiring and infrastructure spending. However, investors seem unbothered, viewing these investments as essential to maintaining Meta's leadership in generative AI and advertising. Meta stock's price hike signaled renewed investor confidence driven by AI-fueled forward outlook. Crucially, management's substantial investment, particularly in generative AI and Llama 2, resonated strongly with the market. The stock also remains a key candidate for in coming months. Consequently, the market response reflects a re-evaluation of the company's growth trajectory and a clear path toward enhanced profitability.

Big Tech may be breaking the bank for AI, but investors love it

Big Tech is spending more than ever on artificial intelligence - but the returns are rising too, and investors are buying in. AI played a bigger role in driving demand across internet search, digital advertising and cloud computing in the April-June quarter, powering revenue growth at technology giants Microsoft, Meta, and Alphabet. Betting that momentum will sustain, Microsoft and Alphabet decided to ramp up spending to ease capacity shortages that have limited their ability to meet soaring AI services demand, even after several quarters of multi-billion-dollar outlays. The results offer the clearest sign yet that AI is emerging as a primary growth engine, although the monetization journey is still in its early days, investors and analysts said. The upbeat commentary also bodes well for Amazon.com, the largest U.S. cloud provider, which will report earnings on Thursday after markets close, and underscores how surging demand for the new technology is shielding the tech giants from tariff-driven economic uncertainty hobbling other sectors. "As companies like Alphabet and Meta race to deliver on the promise of AI, capital expenditures are shockingly high and will remain elevated for the foreseeable future," said Debra Aho Williamson, founder and chief analyst at Sonata Insights. But if their core businesses remain strong, "it will buy them more time with investors and provide confidence that the billions being spent on infrastructure, talent and other tech-related expenses will be worthwhile," she added. Microsoft shares rose more than six per cent on Thursday, with the Windows maker crossing US$4 trillion in market value - a milestone only chip giant Nvidia had reached before it. Meta was up even more, rising 12.2 per cent to a record high and on course to add around US$200 billion to its market value of about US$1.75 trillion. Amazon gained about one per cent. All the companies have faced intense scrutiny from investors over their ballooning capital expenditures, which were expected to total US$330 billion this year before the latest earnings. And until a few days ago, the Magnificent Seven stocks were also trailing the S&P 500 in year-to-date performance. Microsoft said on Wednesday it would spend a record US$30 billion in the current quarter, after better-than-expected sales and an above-estimate forecast for its Azure cloud computing business showcased the growing returns on its massive AI bets. The prediction puts Microsoft on track to potentially outspend its rivals over the next year. It came after Google-parent Alphabet beat revenue expectations and raised its spending forecast by US$10 billion to US$85 billion for the year. Microsoft also disclosed for the first time the dollar figure for Azure sales and the number of users for its Copilot AI tools, whose adoption has long been a concern for investors. It said Azure generated more than US$75 billion in sales in its last fiscal year, while Copilot tools had over 100 million users. Overall, around 800 million customers use AI tools peppered across Microsoft's sprawling software empire. "It's the kind of result that quickly silences any doubts about cloud or AI demand," said Josh Gilbert, market analyst at eToro. "Microsoft is more than justifying its spending." Other AI companies have also attracted a clutch of users. Alphabet said last week its Gemini AI assistant app has more than 450 million monthly active users. OpenAI's ChatGPT, the application credited with kicking off the generative AI frenzy, has around 500 million weekly active users. Meta, meanwhile, raised the bottom end of its annual capital expenditure forecast by US$2 billion, to a range of between US$66 billion and US$72 billion. It also said that costs driven by its efforts to catch up in Silicon Valley's intensifying AI race would push 2026 expense growth rate above 2025's pace. Better-than-expected sales growth in the April-June period and an above-estimate revenue forecast for the current quarter, however, assured investors that strength in the social media giant's core advertising business can support the massive outlays. "The big boys are back," said Brian Mulberry, portfolio manager at Zacks Investment Management, which holds shares in all three major U.S. cloud providers. "This simply proves the Magnificent Seven is still magnificent at this moment in time." ---

Meta Earnings Preview: Can Social Media Giant Justify Massive Bet on AI? | Investing.com UK

Tech firms are currently spending heavily on AI, and Google's parent company, Alphabet (NASDAQ:GOOGL), just said it will raise its AI investment to $85 billion this year. Meta is also focused on AI and may announce plans to boost spending. Investors will be watching closely to see what Meta says about its spending and earnings. Right now, Meta's stock is going through a dip and looking for support before it can possibly start rising again. Meta originally planned to invest between $64 billion and $72 billion in AI this year. But that amount could go up, especially since its rivals are moving fast and Meta needs to keep pace. A large share of this spending is going into building and expanding massive data centers under the Hyperion project. Meta has also made some notable hires recently, bringing in top talent like Alexander Wang, Nat Friedman, and Ruoming Pang, who previously worked at Apple. Advertising still makes up a big part of Meta's revenue, and AI is playing a bigger role here too. It helps the company target and deliver ads more effectively. A key tool in this area is Advantage+, which uses automation and optimization to improve ad performance. How well ad revenues match up to expectations will likely be an important factor in how the market reacts to Meta's results. From a fundamentals perspective, Meta is in strong financial shape. Its revenue and profit figures are solid, and its overall financial health is rated 4 out of 5. There is still a chance that Meta's stock could drop by 9 to 10%, based on InvestingPro's fair value estimate. But a lot depends on today's earnings report, which the market seems optimistic about. This is clear from the many recent upward revisions to forecasts. To avoid a downside move, Meta will likely need to deliver results that at least match or beat expectations again. A 10% drop would reflect a very pessimistic view right now and would suggest that Meta's results came in much weaker than expected. After failing to break back into an uptrend and getting pushed back from the resistance near $724, Meta's stock continues to move in a corrective phase. Sellers are now focused on the next key zone of support, which lies between $680 and $695. If the earnings come in stronger than expected, a move above both the upward trendline and the $724 resistance level would be a key technical signal. This breakout could pave the way for a push toward Meta's all-time highs. *** Whether you're a novice investor or a seasoned trader, leveraging InvestingPro can unlock a world of investment opportunities while minimizing risks amid the challenging market backdrop. Subscribe now for up to 50% off amid the summer sale and instantly unlock access to several market-beating features, including: ProPicks AI: AI-selected stock winners with proven track record. InvestingPro Fair Value: Instantly find out if a stock is underpriced or overvalued. Advanced Stock Screener: Search for the best stocks based on hundreds of selected filters, and criteria. Top Ideas: See what stocks billionaire investors such as Warren Buffett, Michael Burry, and George Soros are buying. Disclaimer: This article is written for informational purposes only. It is not intended to encourage the purchase of assets in any way, nor does it constitute a solicitation, offer, recommendation or suggestion to invest. I would like to remind you that all assets are evaluated from multiple perspectives and are highly risky, so any investment decision and the associated risk is at the investor's own risk. We also do not provide any investment advisory services.

Meta shares jump as AI fuels ad sales, outweighing big capital costs

(Reuters) -Meta Platforms forecast third-quarter revenue well above analysts' estimates on Wednesday, as artificial intelligence once more powered its core advertising business, sending its shares soaring 11% in extended trading. The bumper results could ease investor worries about the social media giant's frenzied pace of spending, at least for now, as it seeks to change Wall Street's impression that it lags rivals including Microsoft and Alphabet's Google in the AI race. Meta raised the bottom end of its annual capital expenditures forecast by $2 billion, to a range of between $66 billion and $72 billion, as CEO Mark Zuckerberg told analysts on a call that AI was making big leaps possible in its business that makes money by selling ads on Facebook and Instagram. Rising costs to build out data center infrastructure and employee compensation costs - Meta has been poaching researchers with mega salaries - would push the 2026 expense growth rate above the pace in 2025, Meta said. The company is planning higher capital expenses next year as well. "I think there are all these questions that people have about what are going to be the timelines to get to really strong AI or superintelligence ... we've observed the more aggressive assumptions, or the fastest assumptions, have been the ones that have most accurately predicted what would happen. I think that that just continued to happen over the course of this year too," Zuckerberg said on a conference call with analysts. Investors have largely backed Zuckerberg's pursuit of superintelligence - a hypothetical concept where AI surpasses human intelligence in every possible way - pushing the company's stock up nearly a fifth so far this year. Meta's post-market stock gains on Wednesday, along with those of Microsoft's, added a combined half a trillion dollars in stock market value. Microsoft said on Wednesday it expects capital expenditure to exceed $30 billion in its fiscal first quarter, far above analysts' estimate of $23.75 billion. At that pace, the company would spend roughly $120 billion on AI this fiscal year. The update came a week after Google parent Alphabet raised its capital spending plans for the year to about $85 billion and signaled more to come next year to meet surging demand for AI services. 'PUSH VERY AGGRESSIVELY' For the third quarter, Meta said it expected total revenue of $47.5 billion to $50.5 billion, compared with analysts' average estimate of $46.15 billion, according to data compiled by LSEG. Its third-quarter guidance assumed a 1% benefit from a weak dollar. It said year-over-year revenue growth in the fourth quarter would be slower than in the third quarter. "AI-driven investments into Meta's advertising business continue to pay off ... But Meta's exorbitant spending on its AI visions will continue to draw questions and scrutiny from investors who are eager to see returns," Emarketer senior analyst Minda Smiley said. She noted that the company's earnings "come against a backdrop of regulatory challenges that Meta faces in the U.S. and abroad, adding more uncertainty to its future." U.S. antitrust regulators have sued Meta to force it to restructure or sell Instagram and WhatsApp, claiming the company sought to monopolize the market for social media platforms used to share updates with friends and family. With court papers due in September, the judge overseeing the case is unlikely to rule until later this year at the earliest. Zuckerberg testified in April that the company was initially slow to recognize the competitive threat of TikTok, and that Meta has over the years tried to build many apps that never gained traction. The founder-CEO has pledged to spend hundreds of billions of dollars to build massive AI data centers, having shelled out $14.3 billion for a stake in startup Scale AI and poached its 28-year-old billionaire CEO, Alexandr Wang. After a lackluster reception for its Llama 4 model that led to staff departures, Meta has tried to revitalize its AI push by sparking a high-stakes talent war in which it has doled out more than $100 million in pay packages to researchers from rival firms. "We're just going to push very aggressively on all of that," Zuckerberg said on the conference call, referring to Meta's AI strategy. In the second quarter, AI-powered ad recommendations drove about 5% more conversions on Instagram and 3% on Facebook, the company said. Ad conversions refer to a user making a purchase or a commitment after clicking or viewing an ad. The tech giant recently introduced an AI-driven image-to-video ad creation tool under its Advantage+ suite, allowing marketers to generate video ads from static images. Meta reported revenue of $47.52 billion for the quarter ended June 30, which surpassed analysts' average estimate of $44.80 billion. Profit per share of $7.14 for the second quarter also exceeded estimates of $5.92. Instagram, whose Reels product competes with ByteDance's TikTok and YouTube Shorts for ad dollars in the popular short video format, is set to account for more than half of Meta's ad revenue in the U.S. this year, according to eMarketer. (Reporting by Echo Wang in New York, Jaspreet Singh in Bengaluru and Kenrick Cai in San Francisco; Additional reporting by Jody Godoy in Washington; Editing by Tasim Zahid, Sayantani Ghosh, Matthew Lewis and Stephen Coates)

Meta confirms its momentum and surprises with its targets

In the spotlight after its recent strategic decisions, Meta has just completed a solid Q2. The group is taking advantage of this to nudge up its annual spending range and its forecasts for Q3. Meta's stock jumped 10% after announcing Q3 revenue forecasts that were well above expectations at between $47.5bn and $50.5bn. The group is taking advantage of this to slightly raise its annual spending range, now estimated at between $66bn and $72bn, underscoring its massive commitment to the infrastructure needed to develop advanced artificial intelligence, which it calls superintelligence. Meta is continuing its aggressive AI strategy, despite a mixed launch of its Llama 4 model. The company is waging a veritable war for talent, offering record salaries to rival researchers, while investing heavily in data centers, notably through a $14.3bn commitment to Scale AI, representing 49% of the company. Zuckerberg has said he wants to invest "hundreds of billions" to dominate the sector. Zuckerberg's recruitment strategy has had two distinct effects. The first, obvious one has been to poach talent from his rivals and attract many bright minds to his new superintelligence division. The second is the effect of his exuberant offers, which have forced the competition to follow suit, resulting in additional expenses for them. To finance this ambition, Meta is banking on its AI-powered advertising tools, such as Advantage+, which can transform images into videos. Instagram Reels is also emerging as a growth driver against TikTok, while the company is accelerating the monetization of WhatsApp and Threads. The appointment of Connor Hayes as head of Threads signals a desire to establish the platform as a standalone product.

Microsoft, Meta surge after blowout results

LONDON (Reuters) -Shares in artificial intelligence heavyweights Microsoft and Meta Platforms both surged in European trading on Thursday, after blowout quarterly results after-market on Wednesday. Meta shares surged 12.2% in Frankfurt after it forecast quarterly revenue well ahead of Wall Street expectations. Microsoft shares jumped 9%, as surging Azure cloud computing revenue above analysts' expectations, showcasing the growing return on its AI bets. The jump in shares lifted futures on Wall Street, with S&P futures up 1% and futures on the technology-heavy Nasdaq up 1.3%. (Reporting by Samuel Indyk; Editing by Amanda Cooper)

Meta shares jump as Zuckerberg stands firm on AI bets

STORY: Meta's earnings and forecasts beat analysts' estimates Wednesday, as it said artificial intelligence was making big strides in its core ad businesses. The Facebook parent posted a revenue of $47.5 billion for the quarter ending in June, beating expectations. CEO Mark Zuckerberg said in a conference call Wednesday metrics on AI-driven ad conversions on Instagram and Facebook edged up in the second quarter. Ad conversions refer to a user making a purchase or a commitment after clicking or viewing an ad. Meanwhile, Meta ranged its third-quarter revenue somewhere between $47.5 billion to $50.5 billion, higher than analysts' estimates. Meta shares were boosted by over 11% in extended trading. The bumper results could ease investor worries about the social media giant's frenzied pace of spending. Zuckerberg has pledged to spend hundreds of billions of dollars building massive AI data centers, having shelled out $14 billion for a stake in startup Scale AI, and poached its 28-year-old billionaire CEO, Alexandr Wang. Meta on Wednesday raised its annual capital expenditures forecast by $2 billion - and said its 2026 expense growth rate would outstrip the one in 2025. Looking ahead - the company says it expects a rocky fourth quarter. It faces regulatory challenges in the U.S. and abroad - a possible ruling later this year in the U.S. in an antitrust trial involving Instagram and WhatsApp may add uncertainty to its future, says an industry analyst.

Wall St futures hit record peaks as Meta, Microsoft results get AI boost

(Reuters) -Futures tied to the S&P 500 and Nasdaq surged to record highs on Thursday after strong earnings from tech giants Meta and Microsoft reinforced investor confidence that artificial intelligence investments are paying off. Meta Platforms soared 11.5% in premarket trading after the social media giant forecast third-quarter revenue well above estimates, thanks to AI boosting its core advertising business. Microsoft issued a record capital spending outlook of $30 billion for the current quarter and reported higher-than-expected sales in its Azure cloud computing business. The stock surged 8.3%. Other tech heavyweights such as Amazon and Nvidia also climbed 3.2% and 1.6%, respectively, while Microsoft was on track to hit a $4 trillion market capitalization for the first time. At 05:53 a.m. ET, Dow E-minis were up 151 points, or 0.34%, Nasdaq 100 E-minis were up 302.5 points, or 1.29%, and S&P 500 E-minis were up 60.5 points, or 0.95%. The Wall Street indexes are also set for monthly gains amid easing trade tensions and renewed enthusiasm around AI. On Wednesday, the S&P 500 and blue-chip Dow ended lower as Federal Reserve Chair Jerome Powell diluted investor expectations for an interest rate cut in September after the central bank kept rates unchanged, as widely expected. Powell said it was too early to predict a September rate cut, adding that current policy is not restricting the economy. The statement came after stronger-than-expected GDP data for the second quarter. Data on Personal Consumption Expenditure (PCE) - the Fed's preferred inflation gauge - for June is due to be released at 08:30 a.m. ET. Traders see a 56.8% chance for a September rate cut, according to the CME Group's FedWatch tool. Investors also braced for Friday's non-farm payrolls data and tariff deadline set by U.S. President Donald Trump, who has vowed to not grant any extension to trading partners that fail to secure a deal. EU officials said European liquor could face 15% tariffs from August 1 until a different agreement is reached, with talks set to continue in the fall. Trump announced a trade deal with South Korea on Wednesday, setting an import tariff of 15% for the Asian country, down from a threatened 25%. However, caution prevailed after he threatened to impose a 25% tariff on India, even as the two nations remain at the negotiating table. In other stocks, Applied Digital soared 26% after the data center operator surpassed estimates for quarterly revenue, thanks to AI-driven demand for its cloud infrastructure. (Reporting by Nikhil Sharma in Bengaluru; Editing by Devika Syamnath)

Big Tech may be breaking the bank for AI, but investors love it

(Reuters) -Big Tech is spending more than ever on artificial intelligence - but the returns are rising too, and investors are buying in. AI played a bigger role in driving demand across internet search, digital advertising and cloud computing in the April-June quarter, powering revenue growth at technology giants Microsoft, Meta, and Alphabet. Betting that momentum will sustain, Microsoft and Alphabet decided to ramp up spending to ease capacity shortages that have limited their ability to meet soaring AI services demand, even after several quarters of multi-billion-dollar outlays. The results offer the clearest sign yet that AI is emerging as a primary growth engine, although the monetization journey is still in its early days, investors and analysts said. The upbeat commentary also bodes well for Amazon.com, the largest U.S. cloud provider, which will report earnings on Thursday after markets close, and underscores how surging demand for the new technology is shielding the tech giants from tariff-driven economic uncertainty hobbling other sectors. "As companies like Alphabet and Meta race to deliver on the promise of AI, capital expenditures are shockingly high and will remain elevated for the foreseeable future," said Debra Aho Williamson, founder and chief analyst at Sonata Insights. But if their core businesses remain strong, "it will buy them more time with investors and provide confidence that the billions being spent on infrastructure, talent and other tech-related expenses will be worthwhile," she added. Microsoft shares rose about 9% in premarket trading on Thursday, putting the Windows maker on track to cross $4 trillion in market value - a milestone only chip giant Nvidia has reached so far. Meta was up even more, rising 11.5% and on course to add nearly $200 billion to its market value of $1.75 trillion. Amazon gained over 3%. All the companies have faced intense scrutiny from investors over their ballooning capital expenditures, which were expected to total $330 billion this year before the latest earnings. And until a few days ago, the Magnificent Seven stocks were also trailing the S&P 500 in year-to-date performance. SILENCING DOUBTS Microsoft said on Wednesday it would spend a record $30 billion in the current quarter, after better-than-expected sales and an above-estimate forecast for its Azure cloud computing business showcased the growing returns on its massive AI bets. The prediction puts Microsoft on track to potentially outspend its rivals over the next year. It came after Google-parent Alphabet beat revenue expectations and raised its spending forecast by $10 billion to $85 billion for the year. Microsoft also disclosed for the first time the dollar figure for Azure sales and the number of users for its Copilot AI tools, whose adoption has long been a concern for investors. It said Azure generated more than $75 billion in sales in its last fiscal year, while Copilot tools had over 100 million users. Overall, around 800 million customers use AI tools peppered across Microsoft's sprawling software empire. "It's the kind of result that quickly silences any doubts about cloud or AI demand," said Josh Gilbert, market analyst at eToro. "Microsoft is more than justifying its spending." Other AI companies have also attracted a clutch of users. Alphabet said last week its Gemini AI assistant app has more than 450 million monthly active users. OpenAI's ChatGPT, the application credited with kicking off the generative AI frenzy, has around 500 million weekly active users. Meta, meanwhile, raised the bottom end of its annual capital expenditure forecast by $2 billion, to a range of between $66 billion and $72 billion. It also said that costs driven by its efforts to catch up in Silicon Valley's intensifying AI race would push 2026 expense growth rate above 2025's pace. Better-than-expected sales growth in the April-June period and an above-estimate revenue forecast for the current quarter, however, assured investors that strength in the social media giant's core advertising business can support the massive outlays. "The big boys are back," said Brian Mulberry, portfolio manager at Zacks Investment Management, which holds shares in all three major U.S. cloud providers. "This simply proves the Magnificent Seven is still magnificent at this moment in time." (Reporting by Aditya Soni and Deborah Sophia in Bengaluru, Echo Wang in New York; Editing by Muralikumar Anantharaman) By Aditya Soni and Deborah Mary Sophia