Meta's Q3 Earnings Preview: AI Innovations and Search Engine Plans Fuel Optimism

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On Wed, 23 Oct, 4:05 PM UTC

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Meta Platforms is set to report its Q3 earnings, with analysts expecting strong growth driven by AI initiatives and potential plans for an AI-powered search engine.

Meta's Q3 Earnings Expectations

Meta Platforms is poised to report its third-quarter earnings, with analysts projecting significant growth. Consensus estimates anticipate earnings per share of $5.24 and revenue of $40.27 billion, marking substantial increases from the previous year 12. The company has consistently outperformed analyst estimates in recent quarters, beating revenue projections for eight consecutive quarters and earnings per share estimates for six straight quarters 1.

AI-Powered Search Engine Plans

A recent report suggests that Meta is developing its own AI-powered search engine to support its Meta AI chatbot 1. This move aligns with the company's strategic goal of reducing dependence on competitors like Google and Microsoft's Bing. Bank of America analyst Justin Post views this development as consistent with Meta's long-term objectives and believes the company is well-positioned to develop internal AI assistant and query response capabilities 1.

AI Initiatives and Growth

Meta's focus on artificial intelligence is expected to be a key driver of growth. CEO Mark Zuckerberg previously stated that Meta AI is on track to become the most used AI assistant globally by the end of the year 3. The company's AI investments have already shown promising results, with Meta AI reportedly having almost 500 million monthly active users across platforms like Instagram and Facebook 3.

Financial Performance and Market Position

Meta's stock has performed exceptionally well, rising approximately 67% year-to-date 3. Analysts maintain a positive outlook, with several firms raising their price targets for Meta shares 14. The company's strong market position in AI and e-commerce advertising is seen as a catalyst for sustained growth 5.

Key Metrics to Watch

Investors and analysts will be closely monitoring several metrics in the earnings report:

  1. Ad impressions and price per ad, which both increased by 10% year-over-year in Q2 1.
  2. Progress in AI development and implementation across Meta's platforms 1.
  3. Costs and capital expenditures, with Meta previously raising its 2024 capital expenditures forecast to $37-40 billion 1.
  4. Revenue guidance for Q4, expected to be between $45-47.5 billion 4.

Industry Impact and Future Outlook

Meta's AI advancements and potential search engine development could have significant implications for the tech industry. If successful, it may shift some internet traffic away from Google Search, potentially impacting Alphabet's market share 1. Additionally, Meta's continued investment in AI infrastructure and the development of tools like Llama 3.2, an open-source multimodal large language model, position the company as a major player in the AI space 3.

As Meta prepares to release its Q3 results, the tech giant appears well-positioned to capitalize on its AI investments and market dominance in social media advertising. The upcoming earnings report will provide crucial insights into the company's progress in AI integration, financial performance, and strategic direction in an increasingly AI-driven digital landscape.

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