Facebook owner Meta Platforms beat analysts’ estimates for third-quarter revenue and profit on Wednesday, but warned of “significant acceleration” in artificial intelligence-related infrastructure expenses.
The outcomes sent mixed signals to investors about whether digital ad sales from Meta’s core social media business would proceed to cover the associated fee of its massive AI buildout.
Shares of the Menlo Park, Calif.-based firm fell 2.9% in after-hours trading.
“Meta must prove that it might proceed to cover its AI costs as they rise next 12 months, and any weakness in its core ad business could make investors nervous as they proceed to attend for a return on Meta’s larger AI bets,” said Emarketer principal analyst Jasmine Enberg.
Like its Big Tech peers, Meta has invested heavily in data centers to capitalize on the generative AI boom. Unlike providers of cloud services, nevertheless, it doesn’t expect to earn money from those investments instantly and subsequently is more subject to scrutiny from investors around its spending.
The world’s biggest social media company, headed by CEO Mark Zuckerberg, kept costs in check within the third quarter, with total expenses of $23.2 billion and capital expenditure of $9.2 billion. It projected a rather improved expense picture for the 12 months as well, narrowing its total expense forecast to $96 billion to $98 billion.
In its press release, nevertheless, it warned of “a big acceleration in infrastructure expense growth next 12 months as we recognize higher growth in depreciation and operating expenses of our expanded infrastructure fleet.”
Investors have been wary of Meta’s spending in recent months. Its shares sank in April after it disclosed a higher-than-expected expense forecast, knocking $200 billion off its stock-market value.
That ended a run of strong quarters for Meta, which has climbed back from a share-price meltdown in 2022 by slimming its workforce, leaning in to investor excitement about AI and earlier this 12 months issuing its first-ever dividend.
Meta’s earnings come after encouraging results from digital ad bellwethers Alphabet and Snap, which each beat third-quarter revenue estimates on Tuesday thanks partially to rising sales of AI-assisted ads.
Meta reported third-quarter profit of $6.03 per share, compared with estimates of $5.25 per share, in keeping with data compiled by LSEG. Third-quarter revenue stood at $40.59 billion, compared with analysts’ estimates of $40.29 billion.
The corporate also forecast between $45 billion and $48 billion in fourth-quarter revenue, compared with analysts’ estimates of $46.31 billion, in keeping with data from LSEG.
Promoting accounts for the overwhelming majority of Meta’s revenue, meaning higher marketing spending through the holiday season could provide a vital boost to the corporate’s bottom line, in keeping with analysts.
Meta’s family day by day lively people (DAP), a metric it uses to trace unique users who open any one among its apps in a day, grew 5% within the third quarter to three.29 billion. DAP increased 7% within the preceding June quarter, to three.27 billion.
Meta is well-positioned to squeeze more revenue out of users as user growth slows, given its AI tools to indicate people more content that match their interests, Enberg said.
The corporate’s Reality Labs division, which produces its Quest virtual reality headsets, smart glasses made with EssilorLuxottica’s Ray-Ban and upcoming augmented-reality glasses, lost $4.4 billion within the third quarter, narrower than analyst estimates of a $4.7 billion loss.
Facebook owner Meta Platforms beat analysts’ estimates for third-quarter revenue and profit on Wednesday, but warned of “significant acceleration” in artificial intelligence-related infrastructure expenses.
The outcomes sent mixed signals to investors about whether digital ad sales from Meta’s core social media business would proceed to cover the associated fee of its massive AI buildout.
Shares of the Menlo Park, Calif.-based firm fell 2.9% in after-hours trading.
“Meta must prove that it might proceed to cover its AI costs as they rise next 12 months, and any weakness in its core ad business could make investors nervous as they proceed to attend for a return on Meta’s larger AI bets,” said Emarketer principal analyst Jasmine Enberg.
Like its Big Tech peers, Meta has invested heavily in data centers to capitalize on the generative AI boom. Unlike providers of cloud services, nevertheless, it doesn’t expect to earn money from those investments instantly and subsequently is more subject to scrutiny from investors around its spending.
The world’s biggest social media company, headed by CEO Mark Zuckerberg, kept costs in check within the third quarter, with total expenses of $23.2 billion and capital expenditure of $9.2 billion. It projected a rather improved expense picture for the 12 months as well, narrowing its total expense forecast to $96 billion to $98 billion.
In its press release, nevertheless, it warned of “a big acceleration in infrastructure expense growth next 12 months as we recognize higher growth in depreciation and operating expenses of our expanded infrastructure fleet.”
Investors have been wary of Meta’s spending in recent months. Its shares sank in April after it disclosed a higher-than-expected expense forecast, knocking $200 billion off its stock-market value.
That ended a run of strong quarters for Meta, which has climbed back from a share-price meltdown in 2022 by slimming its workforce, leaning in to investor excitement about AI and earlier this 12 months issuing its first-ever dividend.
Meta’s earnings come after encouraging results from digital ad bellwethers Alphabet and Snap, which each beat third-quarter revenue estimates on Tuesday thanks partially to rising sales of AI-assisted ads.
Meta reported third-quarter profit of $6.03 per share, compared with estimates of $5.25 per share, in keeping with data compiled by LSEG. Third-quarter revenue stood at $40.59 billion, compared with analysts’ estimates of $40.29 billion.
The corporate also forecast between $45 billion and $48 billion in fourth-quarter revenue, compared with analysts’ estimates of $46.31 billion, in keeping with data from LSEG.
Promoting accounts for the overwhelming majority of Meta’s revenue, meaning higher marketing spending through the holiday season could provide a vital boost to the corporate’s bottom line, in keeping with analysts.
Meta’s family day by day lively people (DAP), a metric it uses to trace unique users who open any one among its apps in a day, grew 5% within the third quarter to three.29 billion. DAP increased 7% within the preceding June quarter, to three.27 billion.
Meta is well-positioned to squeeze more revenue out of users as user growth slows, given its AI tools to indicate people more content that match their interests, Enberg said.
The corporate’s Reality Labs division, which produces its Quest virtual reality headsets, smart glasses made with EssilorLuxottica’s Ray-Ban and upcoming augmented-reality glasses, lost $4.4 billion within the third quarter, narrower than analyst estimates of a $4.7 billion loss.
