Meta Surges as AI Focus Fuels Earnings Beat

Company posts strong Q2 results, stock hits all-time high amidst AI talent war

Meta Platforms reported robust second-quarter financial results that propelled its stock to record highs in after-hours trading. CEO Mark Zuckerberg detailed the company’s aggressive “all-in” strategy for artificial intelligence, acknowledging the significant investments required to secure top AI talent.

AI Ambitions Drive Q2 Success

The tech giant surpassed analyst expectations for both revenue and earnings per share. Revenue reached $47.52 billion, exceeding the projected $44.83 billion, while earnings per share stood at $7.14, comfortably above the estimated $5.89.

Following the announcement, Meta’s shares climbed over 12% in extended trading, reaching $780, a new all-time high for the company.

Talent War Elevates Costs

During the analyst call, Mark Zuckerberg highlighted the substantial cost associated with Meta’s AI initiatives. Employee compensation for technical expertise in critical AI areas was identified as the second-largest contributor to cost growth, trailing only infrastructure expenses.

The company’s investment in its new Superintelligence Lab, led by Scale AI founder Alexandr Wang, represents a significant part of this strategy. Meta’s acquisition stake in Scale AI, reportedly valued at $15 billion, underscores the scale of its AI ambitions.

“We’re building an elite, talent-dense team. I’ve spent a lot of time building this team this quarter.”

—Mark Zuckerberg, CEO of Meta

Zuckerberg also pointed to the strategic hiring of prominent AI figures, including former OpenAI researcher Shengjia Zhao as chief scientist for Superintelligence Labs and ex-GitHub CEO Nat Friedman. He expressed a preference for lean, highly skilled teams to drive cutting-edge research.

AI Ray-Bans Accelerate Reality Labs Growth

Meta’s AI-powered Ray-Ban smart glasses are experiencing accelerating sales, contributing to a nearly 5% revenue increase in the Reality Labs division. Zuckerberg envisions these glasses as the “ideal form factor for AI,” integrating seamlessly into daily life.

Furthermore, Meta’s CFO, Susan Li, reported that approximately two million advertisers are now utilizing the company’s generative AI tools for video creation and image manipulation.

Industry Analysts Praise Meta’s Performance

Financial analysts widely lauded Meta’s quarterly performance. William Blair analysts described it as a “Massive Quarter Fueled by AI Advancements,” citing the company’s ability to scale profitably while making substantial capital investments. They expressed optimism about Meta’s AI adoption and its benefits for advertisers, positioning the company as a future AI leader.

RBC analysts characterized the results as a “Strong Q2,” noting Meta’s 22% revenue growth at the upper end of expectations. Similarly, Wedbush’s tech analyst Dan Ives conveyed his positive sentiment with enthusiastic social media posts, emphasizing the significant impact of AI on the tech sector.

“We have been talking about the AI Revolution for years but tonight was a night the tech world and the Street will remember for a long time. The jaw dropping numbers from Redmond and Meta speaks to the AI Revolution hitting its next stage of hyper growth.”

—Dan Ives, Tech Analyst, Wedbush

Investment firm CFRA Research highlighted Meta’s AI hiring spree, the health of its advertising business, and the monetization of its AI initiatives as key investor interests. They reiterated a “Buy” rating and increased their price target to $800, suggesting potential for 12% upside.

Bank of America identified Meta as a “Top Online ad stock” for 2025, believing the company is optimally positioned to leverage AI for advertising enhancements, which could support a higher valuation. The bank maintained its “Buy” rating, raising its price target to $775.

Future Outlook and Investment

Meta’s financial guidance for 2025 remains significant, with total expenses projected between $114 billion and $118 billion. Capital expenditures are also expected to remain high, with an updated range of $66 billion to $72 billion for the year, and a forecast for “similarly significant capital expenditures dollar growth in 2026.”

Analysts at Citizens predict that Meta’s capital expenditures could exceed $90 billion next year as the company continues to invest heavily in AI infrastructure and its superintelligence teams. This aggressive investment cycle, while typically challenging for stocks, may prove different for Meta due to AI’s potential to enhance user experiences.

Meta’s commitment to AI innovation and talent acquisition signals a long-term strategy focused on foundational models and computing power, aiming to reshape the future of personal computing and information access through its advanced AI capabilities.