Meta reported better-than-expected second quarter results and tightened its capital expenditure range for the year to $37 billion to $40 billion largely due to artificial intelligence efforts.
Mark Zuckerberg, CEO of Meta, said Meta AI "is on track to be the most used AI assistant in the world by the end of the year." The company recently launched its latest Llama open-source large language model and is using its apps to create a training data flywheel.
Meta's approach to generative AI investment differs from the rest of the tech sector. Meta is looking to its AI investments to boost monetization across its platform without selling genAI directly. That approach is part of the reason Meta can be pushing open-source LLMs heavily--it doesn't need a business model for generative AI.
However, Meta is betting that its AI compute investment will turn up new businesses later.
In the second quarter, Meta reported second quarter net income of $13.46 billion, or $5.16 a share, on revenue of $39.07 billion, up 22% from a year ago.
Wall Street was expecting Facebook to deliver second quarter earnings of $4.78 a share on revenue of $38.31 billion.
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By the numbers for the second quarter:
- Meta’s capital expenses were $8.47 billion and total costs and expenses were $24.22 billion, up 7% from a year ago.
- Daily active people across its apps were 3.27 billion on average for June, up 7% from a year ago.
- Average price per ad was up 10% from a year ago.
- Meta’s Reality Labs unit had an operating loss of $4.49 billion in the quarter.
- Meta ended the quarter with headcount of 70,799, down 1% from a year ago.
Key points from the earnings conference call and Zuckerberg include:
- WhatApp 100 million monthly actives in US
- Facebook is seeing traction with younger users.
- Across Facebook and Instagram, AI drives recommendations for customers and boosting engagement. "This has allowed us to extend our unified AI systems, which has already increased engagement," said Zuckerberg, who added that AI is going to boost solutions for advertisers. "Advertisers will ultimately be able to tell us what they're trying to do and their budgets and we'll do it," said Zuckerberg.
- Meta AI will also be an "important feature" that will continually improve.
- "Business AI will also be a big piece here. Over time just like every business has a web site every small business will be able to pull all of their content into an agent that drives sale and save money. I think this will dramatically increase our business messaging revenue," said Zuckerberg.
- Llama 3.1 will represent an inflection point for open-source LLMs.
- On capital expenses, Zuckerberg said he would rather bet on being too early with the buildout instead of being too late "given the time it takes to scale up infrastructure."
- AI is boosting Ray Ban AR glasses demand. Zuckerberg also emphasized his commitment to Reality Labs and AR and VR.
As for the outlook, Meta said revenue in the third quarter will be between $38.5 billion and $41 billion. The company said that it updated its 2024 capital expenditure range from $37 billion to $40 billion, up from $35 billion to $40 billion.
The company didn’t discuss full year 2025 expectations, but did note that its capital expenditures will continue to grow.
