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Yuan Shares rose 6% on Thursday after the company reported earnings. Second quarter profit That beat Wall Street expectations and provided an optimistic revenue forecast.
Meta said late Wednesday that quarterly revenue rose 22% to $39.07 billion from $32 billion a year earlier. Analysts expected revenue of $38.31 billion, according to LSEG.
Net profit soared 73% to $13.47 billion, or $5.16 a share, from $7.79 billion, or $2.98 a share, a year earlier, reflecting a massive cost-cutting drive starting in late 2022. Revenue share is $4.73.
Meta forecast third-quarter revenue of $38.5 billion to $41 billion, with $39.75 billion in the middle, above analysts’ average estimate of $39.1 billion.
CEO Yuan Mark Zuckerberg Chief Financial Officer Susan Lee told investors the company heavy spending Investment in artificial intelligence has already yielded initial results.
“I think there’s a lot of benefit in the way it improves recommendations, helps people find better content and makes the ad experience more effective,” Zuckerberg said on the earnings call. “These are products that are already at scale. We’re working on it Artificial intelligence work will improve this.”
Analysts at Baird said Meta’s business remains strong and continues to benefit from “multiple years of AI-related investments.”
Meta’s latest advances in artificial intelligence will unlock revenue opportunities through higher levels of ad conversion, new digital assistants and multi-modal content creation, they wrote in a report.
“We recommend a ticker change to ‘AIAI,'” analysts wrote in a note on Wednesday.
Bank of America analysts said in a report that they believe Meta is the top artificial intelligence game in the consumer Internet field. They said there was evidence the technology was driving strong growth in advertising and growth in core app users, especially younger audiences.
Analysts noted that Meta’s capital expenditures are increasing due to AI infrastructure spending, but it is driving “tangible business results.” There are also newer generative AI products that have the potential to create revenue opportunities over many years, they said.
Meta said capital spending this year will be between $37 billion and $40 billion. The previous lower end of the range was $35 billion.
Meta’s execution speed is “arguably the best of any company in the digital advertising space,” Barclays analysts wrote in a note Wednesday.
“Right now, the investment community is giving META and all hyperscalers a pass to see AI capex overbuild, but it will lead to a slew of exciting new products that are not factored into revenue forecasts. ” Barclays analysts wrote.
—CNBC’s Michael Bloom and Jonathan Vanian contributed to this report.
