Current:Home > reviewsFacebook parent Meta forecasts upbeat Q3 revenue after strong quarter -TrueNorth Capital Hub
Facebook parent Meta forecasts upbeat Q3 revenue after strong quarter
View
Date:2025-04-18 13:21:22
- Meta Platforms beat market expectations for second-quarter revenue on Wednesday.
- The Facebook and Instagram parent said it anticipates third-quarter revenue in the range of $38.5 billion to $41 billion.
- Meta has been plowing billions of dollars into its data centers in an effort to capitalize on the generative AI boom.
Meta Platforms beat market expectations for second-quarter revenue on Wednesday and issued a rosy sales forecast for the third quarter, signaling that robust digital-ad spending on its social media platforms can cover the cost of its artificial-intelligence investments.
Shares of the company were up 4% after the bell.
The Facebook and Instagram parent said it anticipates third-quarter revenue in the range of $38.5 billion to $41 billion, the midpoint of which is slightly higher than analysts' estimates of $39.1 billion, according to LSEG data.
It said revenue rose 22% to $39.1 billion for the April to June period, compared with analysts' expectations of $38.3 billion.
"Any apprehensions investors may have had about Meta's spending on AI and the metaverse are likely to be allayed by this quarter's results," said eMarketer analyst Max Willens.
"With its margins as healthy as they are, Meta's investors should feel comfortable with the company's vigorous investments in its plans for the future," Willens added.
Shares of social media app Snap, which like Meta relies heavily on digital advertising, rose 3% after the Meta report.
Although Meta's costs rose 7% in the second quarter, its revenue jump topped expense growth substantially and led to a 9-point rise in operating margin, to 38% from 29%.
The rise of crypto ETFs:How to invest in digital currency without buying coins
Family daily active people (DAP), a metric used by the company to track how many unique users per day open any one of its apps, was likewise up 7% year-over-year to an average of 3.27 billion for June.
Meta's earnings come after disappointing results posted by fellow tech industry powerhouses which suggested the payoff from hefty investments in AI technology may take longer than Wall Street had hoped.
Microsoft said on Tuesday it would spend more money this fiscal year to build out AI infrastructure, while Google parent Alphabet warned last week that its capital spending would stay elevated for the rest of the year.
Like both of those companies, Meta has been plowing billions of dollars into its data centers in an effort to capitalize on the generative AI boom. Its shares sank in April after it disclosed a higher-than-expected expense forecast, quickly knocking $200 billion off its stock-market value.
That ended a run of strong quarters for Meta, which has climbed back from a share price meltdown in 2022 by slimming its workforce and leaning in to investor excitement about generative AI technologies.
Meta has picked up hiring over the last year, particularly of AI engineers, while continuing to quietly dissolve teams elsewhere. It said on Wednesday that its head count was down 1% year-over-year.
The social media giant also signaled it would continue to spend big on AI infrastructure, anticipating 2024 capital expenditure would come in between $37 billion and $40 billion, up $2 billion at the lower end from its previous forecast of $35 billion to $40 billion.
It left its total expense forecast for the year unchanged at $96 billion to $99 billion, while cautioning that infrastructure costs would continue to be a "significant driver" of expense growth in 2025.
Losses associated with the company's metaverse unit Reality Labs, which produces its virtual-reality headsets, smart glasses and upcoming augmented-reality glasses, would also continue to "increase meaningfully," it said.
Meta has been updating its ad-buying products with AI tools and short video formats to boost revenue growth, while also introducing new AI features like chat assistants to drive engagement on its social media properties.
In a departure from its peers, Meta has released its AI models mostly for free, wagering that this approach will pay off in the form of innovative products, less dependence on would-be competitors and greater engagement on its core social networks.
The company also stands to benefit if developers use its free models over paid ones, which would undercut the business models of rivals. Developers generally see Microsoft-backed OpenAI as the industry leader, but Meta revealed key performance gains with its Llama 3 release last week that could make its models more attractive.
veryGood! (88865)
Related
- Google unveils a quantum chip. Could it help unlock the universe's deepest secrets?
- A fugitive gains fame in New Orleans eluding dart guns and nets
- Epic Games to give refunds after FTC says it 'tricked' Fortnite players into purchases
- PACCAR recalls over 220,000 trucks for safety system issue: See affected models
- What do we know about the mysterious drones reported flying over New Jersey?
- New York Climate Activists Urge Gov. Hochul to Sign ‘Superfund’ Bill
- Trump says Kari Lake will lead Voice of America. He attacked it during his first term
- How to watch the 'Blue Bloods' Season 14 finale: Final episode premiere date, cast
- Newly elected West Virginia lawmaker arrested and accused of making terroristic threats
- Analysis: After Juan Soto’s megadeal, could MLB see a $1 billion contract? Probably not soon
Ranking
- Federal court filings allege official committed perjury in lawsuit tied to Louisiana grain terminal
- Could Bill Belichick, Robert Kraft reunite? Maybe in Pro Football Hall of Fame's 2026 class
- Not sure what to write in your holiday card? These tips can help: Video tutorial
- OpenAI releases AI video generator Sora to all customers
- Working Well: When holidays present rude customers, taking breaks and the high road preserve peace
- 'The Later Daters': Cast, how to stream new Michelle Obama
- 'Wicked' sing
- Biden administration makes final diplomatic push for stability across a turbulent Mideast
Recommendation
The White House is cracking down on overdraft fees
US inflation likely edged up last month, though not enough to deter another Fed rate cut
Man who jumped a desk to attack a Nevada judge in the courtroom is sentenced
In a First, Arizona’s Attorney General Sues an Industrial Farm Over Its Water Use
Kylie Jenner Shows Off Sweet Notes From Nieces Dream Kardashian & Chicago West
Stock market today: Asian shares retreat, tracking Wall St decline as price data disappoints
Donald Trump is returning to the world stage. So is his trolling
Snoop Dogg Details "Kyrptonite" Bond With Daughter Cori Following Her Stroke at 24