Meta’s Earnings Surge Proves Company’s AI Pivot is Paying Off

Meta is seeing growing revenue as a major player in the AI industry, but there will be demands on improving its AI models.

Meta recently revealed its Q2 financial performance, showcasing revenue that exceeded $39 billion—up 22 percent year-over-year. Profit climbed by 73 percent to approximately $13.5 billion. Key to this growth is the daily activity of over 3.27 billion users on Meta’s various platforms. However, the company’s decision to embrace AI fully has also been paying off. 

AI Infrastructure and Long-Term Vision

Although, as Meta progresses as one of the leading developers of AI technology, the demands on the company will increase. CFO Susan Li highlighted during the earnings call that the returns on the company’s extensive AI investments will not be immediate. CEO Mark Zuckerberg discussed their strategy to invest in Nvidia hardware and other infrastructure, aiming to build capacity well in advance to meet future demands.

He also indicated that Meta’s AI assistant could become the most widely utilized globally by the end of the year. New AI features are expected to enhance user engagement and introduce business functionalities such as AI-driven ads and customer service agents on WhatsApp.

Advancements in AI Models and Products

Meta is preparing for the next iteration of its AI model, Llama 4, anticipated to be the most advanced in the field upon its release next year. Training Llama 4 will require almost ten times the computational power compared to the recently Llama 3.1. Zuckerberg also suggested the potential release of new AI-enhanced eyewear, building on the popularity of the latest Meta Ray-Bans. While AI has taken center stage, the metaverse remains relevant with the successful sales of the Quest 3 headset and a more budget-friendly version expected to debut at the upcoming Connect conference in September.

The social media platform Threads is nearing 200 million monthly users, up from 175 million earlier in July. Facebook has also seen an increase in young adult users within the US, challenging perceptions about its demographic usage. These numbers indicate extensive engagement across Meta’s platforms, contributing to the company’s financial health.

Capital Expenditures and Revenue Projections

Meta’s capital spending for the year is now estimated between $37 and $40 billion, an increase from initial forecasts. When asked about the expected revenue from these investments, CFO Susan Li stated that no revenue is anticipated from generative AI this year. However, the AI infrastructure is designed for flexibility, allowing hardware to be repurposed for tasks such as inferencing, ranking, and recommendations.

Meta’s “Core AI” tools for content ranking and recommendations have seen improvements in user engagement on Facebook and Instagram. A new unified video recommendation tool has notably increased engagement on Facebook Reels. These advancements align with Meta’s broader goal of enhancing user experience through AI.

Advertising Innovations and Financial Impact

Zuckerberg pointed out that AI will eventually overhaul Meta’s advertising model by enabling advertisers to set their goals and budgets, with AI handling the rest. Despite Reality Labs, Meta’s metaverse division, posting a $4.5 billion operating loss, the company’s financial performance remains strong. The positive earnings report led to a rise in Meta’s share price from around $475 to over $510 during after-hours trading.

It is worth noting that not too long ago, Meta was a company lacking direction. Facebook was seeing stagnant user numbers amid a series of privacy and data controversies. Seeing a future in metaverse technology, Facebook rebranded as Meta, a parent company for all platforms and services owned by Facebook. 

However, while the metaverse technology remains interesting, it was not the major growth market Meta thought. The company funneled billions into the metaverse with little return. The AI boom emerged at the right time for Meta, allowing the company to pivot again. As I reported last year, Meta became a full AI company and has since become one of the leaders in the industry. 

Last Updated on February 15, 2025 11:54 am CET

Luke Jones
Luke Jones
Luke has been writing about Microsoft and the wider tech industry for over 10 years. With a degree in creative and professional writing, Luke looks for the interesting spin when covering AI, Windows, Xbox, and more.

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