Meta AI Surge Drives Revenue Boost and Stock Rally
Meta Platforms has forecast a strong third quarter, projecting revenue between $47.5 billion and $50.5 billion. This estimate is well above analysts’ expectations and signals that Meta’s AI investments are strengthening its advertising business. Following the news, the company’s shares jumped 11% in after-hours trading.
The upbeat forecast helps ease investor concerns about Meta’s high spending levels. It also suggests progress in its race to match rivals like Microsoft and Google in artificial intelligence.
AI Drives Growth in Ads and Spending
Meta raised its annual capital expenditure forecast to a range of $66 billion to $72 billion. CEO Mark Zuckerberg explained that AI is helping the company grow by improving how ads are targeted on Facebook and Instagram.
To support its AI development, Meta is expanding its data centres and hiring top talent. These moves will increase its expenses in 2026 beyond the pace set for 2025. Meta also plans to raise capital spending next year.
Zuckerberg shared that faster timelines for reaching advanced AI seem more accurate, based on recent progress. This outlook has encouraged investors, pushing Meta’s stock up nearly 20% this year.
Meta AI Spending Across Tech Giants
Meta’s announcement came on the same day as Microsoft revealed it will spend more than $30 billion on capital expenses in its fiscal first quarter. This is much higher than Wall Street’s estimate of $23.75 billion and puts Microsoft on track to spend about $120 billion on AI this fiscal year.
Alphabet, Google’s parent company, also raised its spending plans. It now expects to invest around $85 billion this year to meet the rising demand for AI services.
Together, Meta and Microsoft’s announcements added roughly half a trillion dollars to the stock market’s value in post-market trading.
Regulatory Pressure and Talent Battles
Despite its strong results, Meta faces ongoing legal challenges. US regulators want the company to restructure or sell Instagram and WhatsApp, claiming Meta holds too much power in social media. A ruling is not expected until later this year.
Internally, Meta has faced challenges with staff turnover following the weak reception of its Llama 4 AI model. In response, it has spent over $100 million in pay packages to attract researchers from competitors.
The company is also making bold investments. It spent $14.3 billion for a stake in Scale AI and hired its CEO, Alexandr Wang, to strengthen its AI position.
Strong Performance and New AI Tools
For the quarter ending June 30, Meta reported revenue of $47.52 billion, exceeding the expected $44.80 billion. Its profit per share was $7.14, well above the estimated $5.92.
AI tools continue to drive growth. AI-powered ad systems helped boost conversions by 5% on Instagram and 3% on Facebook. Meta also launched a new image-to-video tool under its Advantage+ suite. This tool allows advertisers to turn static images into video ads.
Instagram remains a key platform for Meta’s ad business. Its Reels feature, which competes with TikTok and YouTube Shorts, is expected to generate over half of Meta’s US ad revenue this year.
with inputs from Reuters