Live Updates Updated 2024-07-31T21:24:04Z
Ronny Hartmann/Getty
- Meta reported second-quarter earnings on Wednesday.
- The tech giant beat revenue forecasts, driven by strength in its advertising business.
- Shares rose 5% in after-hours trading.
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Meta reported second-quarter earnings on Wednesday after the closing bell, and it looks like another win for Mark Zuckerberg.
The Facebook parent’s revenue and earnings-per-share beat consensus analyst estimates. Shares climbed on the results, which were driven by better-than-expected advertising sales.
Meta has been heavily investing in the technology that drives AI chatbots. CEO Zuckerberg said in a press release that the company’s chatbot, Meta AI, is on pace to become the most widely used in the world by the end of 2024.
Meta’s stock rose roughly 5% in after-hours trading shortly after the results. The stock rose 2.5% on Wednesday, and has gained a robust 34% so far in 2024.
Reality Labs keeps bleeding money
In Q2, Reality Labs, responsible for Meta’s work in AR, VR, and the metaverse, had $353 million in revenue and an operating loss of $4.48 billion.
“For Reality Labs, we continue to expect 2024 operating losses to increase meaningfully year-over-year due to our ongoing product development efforts and investments to further scale our ecosystem,” the earnings release said.
Investors are keeping a close eye on spending in the AI race this earnings season
Meta’s total costs and expenses for Q2 were $24.22 billion, up 7% year-over-year.
The company expects its total expenses for the full year to be somewhere between $96 to $99 billion.
The company expects capital expenditures for the full year to be in the range of $37 to $40 billion, higher than its previous range of $35 to $40 billion.
“While we continue to refine our plans for next year, we currently expect significant capital expenditures growth in 2025 as we invest to support our artificial intelligence research and product development efforts,” Meta’s earnings release said.
Wells Fargo says internal checks point to a solid advertising environment in the second quarter
Wells Fargo raised its second-quarter estimates in a recent note as its internal checks suggests solid ad performance from the company.
“Checks suggest noticeable ad targeting and efficiency improvement in 2Q despite meaningful CPM growth acceleration,” Wells Fargo analyst Ken Gawrelski said.
The bank also expects Meta to maintain its prior capital expenditures guidance of $35 billion to $40 billion for the year.
“Given the unfavorable market reaction to 1Q mgmt commentary on potential revenue displacement due to scaling of newer AI products, believe investors will welcome further framing of potential impact,” Gawrelski said.
Wells Fargo has an “Overweight” rating on Meta with a $625 price target.
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