Meta’s Shares Surge Following Better-Than-Expected Q2 Earnings and Positive Revenue Projection
Shares of Meta skyrocketed by 6% on Thursday after the firm delivered second-quarter earnings that surpassed the predictions of Wall Street analysts and provided an optimistic revenue outlook for the future. The reported revenue for the period saw a 22% increase to $39.07 billion, compared to $32 billion in the previous year. This outperformed the estimated revenue of $38.31 billion by analysts from LSEG.
The company witnessed a remarkable 73% surge in net income, reaching $13.47 billion, equivalent to $5.16 per share, up from $7.79 billion, or $2.98 per share, during the same period in the prior year. This substantial growth can be attributed to significant cost-cutting measures implemented starting in late 2022. The projected earnings per share were $4.73.
Looking ahead to the third quarter, Meta anticipates revenue to fall between $38.5 billion and $41 billion, with the midpoint at $39.75 billion, surpassing the average analyst expectation of $39.1 billion.
During discussions with investors, Meta’s CEO Mark Zuckerberg and CFO Susan Li highlighted the favorable outcomes stemming from the company’s substantial investments in artificial intelligence. Zuckerberg emphasized the enhancements in recommendations, content discovery, and advertising effectiveness facilitated by AI technologies.
Financial analysts at Baird acknowledged Meta’s robust business performance, underscoring the benefits derived from extensive investments in AI over the years. They emphasized that Meta’s recent advancements in AI will unlock new avenues for revenue through enhanced ad conversions, innovative digital assistants, and diverse content creation methods.
Stating that Meta stands as a prominent player in AI within the consumer internet sector, analysts from Bank of America noted the positive impact of AI on driving advertising growth and expanding the user base, especially among younger demographics.
Barclays analysts commended Meta for its exceptional pace of execution in the realm of digital advertising, suggesting that the company is leading the pack in this domain. They anticipate that Meta’s ongoing AI infrastructure investments will introduce groundbreaking products with revenue potential in the coming years.
Capital expenditures for Meta in the current year are estimated to range between $37 billion and $40 billion, with the lower end of the range revised up from $35 billion previously.
As highlighted by analysts from Barclays, the investment community is showing confidence in Meta’s AI-centric vision, which may manifest in novel and revenue-generating products not yet factored into current revenue forecasts.
Source: CNBC
