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Investing.com - Shares in Meta Platforms (NASDAQ:META) soared by roughly 12% in early trading on Thursday after strength in the Facebook-owner’s crucial advertising business powered better-than-anticipated sales in the April-to-June period and raised hopes that company’s artificial intelligence investments are beginning to bear fruit.
Sales jumped by 22% during the second quarter to $47.5 billion, while net income came in at $18.3 billion, both topping Wall Street projections. Analysts at Vital Knowledge said Meta’s top-line results were underpinned by an 11% uptick in ad impressions as well as a 9% increase in ad pricing.
Family daily active people across Meta’s suite of products, which include Instagram and WhatsApp, rose.
For the current quarter, Meta anticipates that revenue will rise by 17% to 24% versus a year earlier, although it flagged that a difficult annual comparison could lead to slower sales growth in the fourth quarter.
Meta, who, like many of its Big Tech peers, has laid out plans to spend heavily on AI, kept its capital expenditures outlook largely unchanged at $66 billion to $72 billion, versus $64 billion to $72 billion previously, and implied that 2026 capex will be around $100 billion. Analysts have estimated next year’s figure will stand at $80 billion.
CEO Mark Zuckerberg has touted AI as a future fuel source for different areas of the business, bolstering the quality of its ads unit and enticing users with chatbot companions. As part of a bid to achieve this goal, Zuckerberg has recently used Meta’s financial firepower to acquire data startup Scale AI for $14 billion and recruit other top AI researchers.
"Being in the conversation of frontier AI labs remains a notable priority for management, and they expect to continue investing in top-tier talent and building out best-in-class infrastructure to hopefully get back into the frontier race," analysts at DA Davidson said in a note.
Meta unveiled iterations of its Llama AI model in April, but has delayed the public release of its larger version, dubbed Behemoth.
However, a spike in depreciation and higher compensation could contribute to "meaningful upward pressure" on 2026 operating expenses, Meta executives also warned.
"Bottom line: the Meta report is extremely robust, and the only negative takeaway is the warning management issues about 2026 costs," the Vital Knowledge analysts said in a note.
(Yasin Ebrahim contributed reporting.)