On Wednesday, Meta Platforms reported third-quarter revenue that was far higher than experts had predicted. The company’s shares surged 11% during extended trading as artificial intelligence once again drove its primary advertising business.
The strong results may allay investor concerns about the social media giant’s frenzy of spending, at least for the time being, as it attempts to shift Wall Street’s perception that it behind rivals such as Microsoft and Alphabet’s Google in the AI race.
Meta increased the bottom end of its annual capital expenditures projection by $2 billion, to a range of $66 billion to $72 billion, after CEO Mark Zuckerberg told analysts on a call that AI was enabling major jumps in the company, which earns money by selling advertisements on Facebook and Instagram.
The expense growth rate in 2026 will surpass that of 2025 due to rising prices for data center infrastructure development and personnel remuneration (Meta has been luring researchers with extravagant wages). Next year, the corporation also plans to increase its capital expenditures.
We’ve seen that the more aggressive or quicker assumptions have been the ones that have most accurately forecasted what would happen, so I believe there are a lot of doubts people have about when we’ll reach very powerful AI or superintelligence. “I believe that just kept happening throughout this year as well,” Zuckerberg stated on a conference call with analysts.
The company’s stock has risen by about a fifth this year as a result of investors’ strong support for Zuckerberg’s quest for superintelligence, a speculative idea in which artificial intelligence (AI) exceeds human intelligence in every manner.
Together, Microsoft’s and Meta’s post-market stock advances on Wednesday increased the value of the stock market by half a trillion dollars.
Microsoft stated on Wednesday that it anticipates spending more than $30 billion on capital projects in its fiscal first quarter, which is much more than the $23.75 billion experts had predicted. The corporation would invest almost $120 billion in AI this fiscal year if it continued at that rate.
In order to fulfill the growing demand for AI services, Alphabet, the parent company of Google, increased its capital spending projections for the year to around $85 billion and hinted at further investment to come next year.
A week before to the update, Alphabet, the parent company of Google, increased its capital spending projections for the year to over $85 billion and hinted at more investment to be made next year to meet the growing demand for AI services.
‘PUSH VERY AGGRESSIVELY’
In contrast to analysts’ average forecast of $46.15 billion for the third quarter, Meta stated that it anticipated overall sales of $47.5 billion to $50.5 billion, according to statistics gathered by LSEG. It projected that a lower dollar would help it by 1% in its third-quarter projection. The fourth quarter’s year-over-year sales increase was predicted to be slower than the third quarter’s.
Investments in Meta’s advertising business powered by AI are still profitable, but the company’s excessive expenditures on its AI aspirations will continue to raise concerns and scrutiny from investors looking for returns, according to senior analyst Minda Smiley of Emarketer.
AI-driven investments in Meta’s advertising division are still profitable, but investors who are keen to see returns will continue to question and scrutinize Meta’s excessive expenditures on its AI visions, according to senior analyst Minda Smiley of Emarketer.
She pointed out that Meta’s results are accompanied by regulatory issues both domestically and internationally, which raises more doubts about the company’s future.
According to a lawsuit filed by U.S. antitrust authorities, Meta attempted to dominate the market for social media platforms used to exchange updates with friends and family, and as a result, it was forced to reorganize or sell Instagram and WhatsApp. Given that court documents are expected in September, the case’s judge is unlikely to make a decision until at least later this year.
In April, Zuckerberg said that the firm was originally hesitant to identify TikTok’s competitive danger and that Meta has attempted to develop other applications over the years, but none of them have ever taken off.
The founder-CEO, who paid $14.3 billion for a share in Scale AI, a company, and acquired its 28-year-old a billionaire CEO, Alexandr Wang, has promised to invest hundreds of billions of dollars to construct enormous AI data centers.
Following staff layoffs due to the disappointing reaction to its Llama 4 model, Meta has attempted to resurrect its AI drive by inciting a high-stakes talent war in which it has offered more than $100 million in compensation packages to researchers from other companies.
Zuckerberg alluded to Meta’s AI plan on the conference call by saying, “We’re just going to push very aggressively on all of that.”
According to the firm, AI-powered ad recommendations increased conversions on Instagram by around 5% and Facebook by about 3% in the second quarter. Ad conversions occur when a person clicks on or views an advertisement and then commits to buying something.
Under its Advantage+ suite, the tech giant has unveiled an AI-powered solution for creating image-to-video advertisements, enabling marketers to create video ads from static images.
For the quarter that concluded on June 30, Meta reported sales of $47.52 billion, above the average forecast of $44.80 billion by analysts. The second quarter’s profit per share of $7.14 surpassed forecasts of $5.92 as well.
More than half of Meta’s ad income in the U.S. this year is expected to come from Instagram, whose Reels product competes with YouTube Shorts and ByteDance’s TikTok for ad dollars in the popular short video format, according to eMarketer.
