Meta's Strong Ad Revenue Fuels AI Ambitions Amid Q2 Gains
Meta Platforms Inc., the parent company of Facebook and Instagram, reported a 22% increase in Q2 revenues, reaching $39.1 billion, surpassing analysts' expectations of $38.3 billion. This growth is attributed to robust digital-ad spending on its social media platforms and strong gains in Europe. The company also saw a 7% increase in daily active users, totaling 3.27 billion in June. Following the positive earnings report, Meta's shares rose 7%, adding approximately $85 billion to its market value.
CEO Mark Zuckerberg emphasized the company's ongoing investment in artificial intelligence (AI) to enhance user engagement and monetize content. Meta released the latest version of its AI foundation model, Llama 3.1, and is working on Llama 4, aiming to create a unified recommendation system for all its content and advertisers. Despite the increase in revenue, Meta's Reality Labs division reported a net loss of $4.49 billion in Q2.
Meta plans to significantly invest in AI infrastructure, with projected capital expenditures of $37 billion to $40 billion in 2024. This follows a previous range of $35 billion to $40 billion. The company expects Q3 revenue to be between $38.5 billion and $41 billion. The strong financial performance has bolstered investor confidence, despite concerns over the high costs associated with AI development and infrastructure.
Additionally, Meta has been active in combating financial sextortion scams, removing around 63,000 Facebook accounts in Nigeria involved in such activities. The company also plans to remove posts that misuse the term "sextortion" in reference to Jewish people and Israelis. The focus on improving digital ad targeting, ranking, and delivery systems through AI continues to be a priority for Meta as it navigates the competitive tech landscape.
