Shares in Meta, the tech firm behind Facebook and Instagram, have surged in extended trading after posting a bumper set of financial results that eased concerns it was lagging rivals in the artificial intelligence (AI) race.
The stock was up 11% after it reported figures covering the second quarter that smashed analysts’ expectations in almost every metric.
The numbers were also seen as justifying chief executive and founder Mark Zuckerberg’s huge spending – long a source of frustration for many Meta investors seeking greater rewards in the short term.
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He told a call with analysts that the company expected to spend up to $72bn (£54bn) this year – and even more in 2026.
At the same time, AI rival Microsoft revealed capital expenditure plans that would see its investment surpass $120bn (£90.5bn) if sustained over the year.
Meta has been investing in people to power its AI-driven growth and infrastructure to grow advertising sales.
Zuckerberg told analysts his pursuit of superintelligence – a hypothetical concept where AI surpasses human intelligence in every possible way – was paying off.
Mark Zuckerberg. File pic: AP
In the second quarter, AI-powered ad recommendations drove about 5% more conversions – a purchase or commitment – on Instagram and 3% on Facebook, the company said.
It helped Meta report revenue of $47.5bn (£36bn) for the three months to the end of June.
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Profit per share of $7.14 (£5.38) also easily exceeded analysts’ estimates.
Meta recently introduced an AI-driven image-to-video ad creation tool under its Advantage+ suite, allowing marketers to generate video ads from static images.
The company said that, as a result, it was forecasting up to $50bn (£37.7bn) of revenue in the current third quarter of the year – way above the consensus expectation around $46bn (£34.7bn).
Commenting on the performance, Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: “Meta has knocked it out of the park. Pick your metric and Meta crushed it, from ad revenue growth to daily users, all the way down to the profit lines.
“AI is clearly delivering real-world benefits for advertisers, and they’re willing to pay more as a result. Average price per ad was up 9% over the quarter, a clear indication that Meta is delivering an improved product for both users and advertisers.
“The broader focus now turns to Meta’s mammoth AI investment plans and whether it can continue to manage those costs without hurting earnings or free cash flow.
“CFO commentary called out higher costs next year, and another year of similar capex growth, which many analysts did not have on their bingo cards. Clearly, all this spending adds some near-term risks to the bottom line, but Meta looks set to be a clear winner in the AI space over the longer term.”
