Meta Blasts Up 11% on Q2 Results—The AI Train Keeps Chugging

Key Points

• Shares of Meta Platforms spiked in after-hours trading after the tech giant released its Q2 earnings.
• Headline figures and key underlying metrics had excellent showings.
• The company continues to drive value through its core AI investments, while also positioning itself to capitalize on long-term GenAI opportunities.

Magnificent Seven stock Meta Platforms NASDAQ: META just reported its much-anticipated Q2 financial results. In no uncertain terms, Meta absolutely smashed expectations.

As of Wednesday's after-hours trading, Meta shares were up more than 11%. 

Below, we’ll break down the headline and key underlying metrics to understand the results.

We’ll also dive into key management commentary and provide an ultimate takeaway for investors.

Meta’s Headline Numbers Blow Expectations Out of The Water

In Q2, Meta’s sales rose to approximately $47.5 billion, equating to a growth rate of 22%. Meanwhile, Wall Street analysts expected revenue to grow by just under 15%. The company’s adjusted earnings per share beat was even more impressive. The figure came in at $7.14, a rise of more than 38% from the prior year quarter. This walloped analyst forecasts of just 11% growth. Guidance also came in strong, with the firm projecting midpoint revenues of $49 billion.

Notably, Meta also boosted the midpoint of its 2025 capital expenditure (CapEx) guidance by $1 billion to $69 billion. This figure is a very good sign for the company. Meta has been achieving strong results with its artificial intelligence (AI) strategy. The moderate CapEx boost signals that it hasn't needed to greatly accelerate spending versus past expectations to achieve these gains.

Meta’s Key Performance Indicators Show How It’s Driving Value

Meta’s key performance indicators were also very impressive. The company’s daily active people (DAP), which measures the number of people who used at least one of its apps every day, increased by 6.4%. This was the fastest DAP growth rate since Q2 2024.

Meta’s average price per ad growth also remained strong at 9%, slightly down from 10% last quarter. Increased ad performance drove this. Meta saw ad conversions rise 5% on Instagram and 3% on Facebook.

However, one of the most impressive metrics in the report was the company’s ad impressions delivered. The figure increased by 11%, a huge improvement from 5% one quarter ago. This figure measures how many more ads Meta displayed to users of its apps.

Overall, this was the fastest ad impressions delivered growth rate in at least the last five quarters. Increased engagement on Meta’s apps drove this. People spent 5% more time on Facebook and 6% more time on Instagram in just one quarter, giving them more opportunities to see ads.

The company continues to see strong return on investment (ROI) in its core AI investments, which are driving these improvements in its advertising business.

Meta’s Reality Labs revenue also returned to yearly growth of 5%, compared to a 6% decline last quarter. However, the figure still declined 10% on a sequential basis. Importantly, AI glasses drove the sales increase, while virtual reality headsets hindered it.

The company also noted that demand for its Ray-Ban glasses outstripped supply in the most popular versions. This is another positive sign, indicating that Meta’s key AI glasses vertical is performing well. Notably, the company did not discuss tariffs and didn't seem to be affected by the firm’s results.

However, this remains a situation to monitor as Trump's reciprocal tariffs kick in on August 1.

Meta’s AI Strategy Updates and The Key Takeaway for Investors

Analysts did not get to hear from Alexandr Wang, the new leader of Meta Superintelligence Labs (MSL), on the call. However, before the earnings release, Meta Chief Executive Officer Mark Zuckerberg put out a memo further outlining his AI vision. He specifically talked about "superintelligence," an evolution of AI that surpasses human intelligence in every way.

Zuckerberg wants to bring “personal superintelligence to everyone." This would allow each person to use superintelligence to advance their important goals. It makes sense for Meta to pursue personal superintelligence. 

The company is seeing strong results in its advertising business because it is using AI to make ads more personalized. Thus, extending this idea to future AI use cases is a logical iteration. Meta also maintained its open-source with guardrails approach to AI models.

As noted, core AI investments are generating strong ROI. However, GenAI, which encapsulates MSL's mission, doesn’t expect to drive meaningful revenue in 2025 or 2026.

The key takeaway from the results is this: Meta continues to be a freight train moving full speed ahead; investors should stay along for the ride. Its core AI investments continue to pay off, and the company continues to invest in GenAI to support longer-term opportunities.