New York, Saturday, August 10, 2024 – Meta Platforms (META) stock jumped over 9% in pre-market trading after exceeding analyst expectations for second-quarter earnings, a report on August 1 said.1
However, the company cautioned about “significant” growth in capital expenditures for 2025.
Meta reported earnings per share (EPS) of $5.16, surpassing analyst estimates of $4.74. Revenue also came in higher than expected, reaching $39.07 billion compared to the projected $38.3 billion.
This strong performance contrasts with the same period last year when Meta posted EPS of $2.98 and revenue of $31.9 billion.
Despite the positive results, Chief Financial Officer Susan Li warned of rising infrastructure costs in 2025 due to depreciation and operations associated with the company’s expanding footprint. This news tempered investor enthusiasm, as Meta did not provide specific spending forecasts for next year.
Investors are particularly focused on Meta’s artificial intelligence (AI) spending, eager to see returns on the company’s hefty investments in this area. During the previous quarter, Meta increased its full-year total expense estimate due to AI spending.
While Meta’s Family of Apps segment, encompassing Facebook, Instagram, WhatsApp, and Messenger, surpassed revenue expectations at $38.72 billion, the Reality Labs segment, focused on mixed reality hardware and software, fell short at $353 million, although this is an improvement over last year’s showing.
Reality Labs remains a cash drain for Meta.
Meta CEO Mark Zuckerberg recently unveiled the company’s latest open-source large language model (LLM), Llama 3.1, advocating for open-source AI development over closed models like OpenAI’s ChatGPT. However, analysts remain cautious about the near-term revenue potential of generative AI in advertising.
Meta’s strong earnings coupled with its ambitious AI and metaverse investments present both opportunities and challenges for the future. While the company remains a dominant force in online advertising, navigating rising costs and delivering on its technology bets will be crucial for its continued success.
- finance.yahoo.com: https://finance.yahoo.com/news/meta-jumps-on-solid-earnings-beat-but-warns-of-significant-spending-expansion-134759044.html[↩]
