Meta reported record revenue and raised its forecast. Shares soared 11%

Meta Platforms, which owns Facebook and Instagram, beat revenue and profit forecasts for the second quarter and gave a stronger-than-expected outlook for the current period. That suggests that the company's advertising business, which generates the bulk of its revenue, continues to grow fast enough to support its aggressive investments in artificial intelligence. It, in turn, is helping Meta build sales.

Meta reported record revenue for the second quarter of 2025, beating Wall Street expectations by 6%, reports Reuters. Sales rose 22% year-over-year to $47.52 billion versus expectations of $44.8 billion, reported CNBC, citing LSEG data. Earnings per share came in 20% above analysts' forecasts at $7.14 versus $5.92, the channel adds. Parent company Facebook's advertising revenue reached $46.56 billion, while analysts expected $43.97 billion, CNBC adds. The company's total expenses for the second quarter totaled $27.08 billion - up 12% year-on-year.

Meta CEO Mark Zuckerberg said in a conference call following the release of its quarterly report that the company's main business, advertising, is benefiting meaningfully from artificial intelligence. "This quarter's strong results were largely made possible by AI, which has significantly improved the efficiency and profitability of our advertising system," said the top executive, who was quoted by CNBC.

The company also raised its revenue forecast for the current quarter to a range of $47.5 billion to $50.5 billion. Even the lower end of the forecast was higher than the Wall Street consensus forecast of $46.14 billion. In addition, Meta raised the lower end of its capex forecast for 2025 from $64 billion to $66 billion - on the back of the growing AI race. The company emphasized that personnel costs will be the second most important driver of cost growth, and total costs in 2026 will grow even more than in 2025. Taking into account the new benchmarks, the company also clarified its forecast for total expenses for the current year - from $113-118 billion to $114-118 billion. Meta did not give a forecast for the fourth quarter, but specified that the revenue growth rate in this period is likely to be lower than in the third quarter.

Meta's strong quarterly results confirm that its advertising business is still growing fast enough to cover its massive investment in artificial intelligence development, notes Bloomberg. The company has been aggressively investing in the AI race. Zuckerberg has rolled out a massive AI expansion in recent months, with the company poaching key talent from OpenAI, Apple and Google, offering bonuses in excess of $100 million, launching data center construction and entering into power agreements to support new computing capacity, reports the Financial Times. In a video published on Wednesday, Zuckerberg outlined the goal of creating a "personal superintelligence" that would help people influence the world by choice, rather than just automating chores. Investors and other market participants are watching closely to see if Meta can justify its multibillion-dollar spending on AI, noted MarketWatch on the eve of its quarterly earnings.

"Meta's AI tools continue to strengthen its advertising business and generate tangible revenue, despite the company spending billions on large-scale projects like building superintelligence," eMarketer senior analyst Minda Smiley said in a commentary for Reuters. At the same time, she said, "such large-scale AI spending is raising more and more questions among investors - especially amid expectations of concrete returns." Smiley also emphasized that Meta's strong results are evidence: the digital advertising market has not yet experienced serious pressure from trade duties.

"In some ways, the current AI race resembles historical technological leaps - from PCs and browsers to search engines and smartphones," Forrester analyst Mike Prue added in a Bloomberg statement. - But the main difference is that it is evolving much more rapidly: the AI that Meta and others seek is itself accelerating its own development." According to him, winning in this race will require companies to make serious financial investments - they will have to "look into the deepest pockets".

Following the release of the quarterly report, Meta quotes soared in the postmarket by more than 11% to $773. Investors are counting on Zuckerberg's increasingly ambitious AI plans to eventually pay off and not overwhelm the sustainable advertising business with costs, the FT notes. At the close of trading on July 30, Meta's market capitalization was up nearly 19%. By comparison, the main U.S. stock index S&P 500 for the same period added about half as much.

According to data from MarketWatch, of the 72 analysts tracking Meta securities, 62 of them recommend buying (Buy and Overweight ratings), nine advise holding (Hold), and only one recommends selling (Sell).

This article was AI-translated and verified by a human editor