Meta Platforms stock soared Thursday after the Facebook parent company reported second-quarter results that easily beat expectations, with revenue growth accelerating. Meta also gave a strong sales forecast and slightly upped its outlook for total spending, as it ramps up its generative AI initiatives.
"What was that? WOW," Bernstein analyst Mark Shmulik said in a client note. "Meta destroyed expectations with perhaps one of the biggest prints in their history."
The Menlo Park, Calif.-based Meta said that it earned an adjusted $7.14 per share for the June-ended quarter, up 38% from a year earlier. That easily beat the $5.88 per share that analysts polled by FactSet were forecasting. Sales increased 22% to $47.52, compared to analyst estimates of $44.81 billion.
Meta told investors it expects sales of $49 billion for the current quarter, based on the midpoint of its range. That was well ahead of the $46.23 billion in Q3 sales that analysts were previously forecasting.
Meanwhile, Meta said it expects to spend $69 billion on capital expenditures for 2025 based on the midpoint of its range, up from a previous $68 billion midpoint. The company also expects total expenses of $116 billion for the year, up from $115 billion the company gave in its Q1 guidance in late April.
The spending comes as Chief Executive Mark Zuckerberg is going all-out to establish Meta as an AI leader. He detailed his vision for personal superintelligence that can unlock a "new era for humanity" in a letter posted on Meta's website Wednesday.
On the stock market today, Meta stock jumped more than 11% to close at 773.44. That marked a record close for Meta, the company's first since late June. Shares are now ahead 32% year-to-date.
Meta's Ad Business Keeps Rolling
Zuckerberg has touted the strength of Meta's core business as he pursues a plan to spent "hundreds of billions" on AI-related infrastructure. That strength derives from Meta's advertising business, which provided 98% of the company's revenue.
Analysts were expecting Meta's revenue growth to slow for a second straight quarter, to about 15% compared to 16% for Meta's Q1 and 21% growth in Meta's December 2024 quarter. Instead, Meta' revenue shot up by 21.6%, its best growth rate in four quarters.
"The strong performance this quarter is largely thanks to AI unlocking greater efficiency and gains across our ad system," Zuckerberg told analysts in a Wednesday conference call.
Zuckerberg said an expanded AI-powered recommendation model for ads boosted conversions by 5% on Instagram and 3% on Facebook. Meanwhile, improved content recommendations boosted time spent on Instagram by 6% and Facebook 5%, Zuckerberg said.
The average price per ad on Meta's Family of Apps — which is led by Facebook, Instagram, Messenger and WhatsApp — increased 9% year-over-year for the second quarter, the company said. Meta's measure of daily users across its apps, daily active people, increased 6% to 3.48 billion.
Bernstein's Shmulik wrote that "the real news here was commentary that expenses are likely growing 20%+ year-over-year in 2026 tied to all those AI hires and server depreciation, while CapEx is set to grow another $30 billion year-over-year to around $100 billion!"
"These are hyperscaler numbers!" he wrote, referring to cloud providers such as Amazon and Microsoft. "But if core performance can continue at this level and there's visible progress toward Superintelligence with traction across any of Meta AI, business messaging, or wearables, there's no telling what the ceiling is for Meta."
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Bullishness Hits New Heights
Citing results that "blew the doors off," Shmulik reiterated an outperform call for Meta stock and jacked his price target up to 900 for Meta stock, compared to 775 coming into the report.
There was a lot of that type of commentary landing in investors' inboxes after Meta's results. The average price target that analysts hold for Meta stock jumped to an average of 806.36 as of Thursday morning, according to FactSet, up nearly 15% from the start of the month.
Wedbush analyst Dan Ives pointed to Meta's and Microsoft's strong results as a "watershed moment for the AI revolution" in a research note. Wedbush's Meta stock analyst, Scott Devitt, upped his target for Meta stock to 920, compared to a previous 750.
Evercore ISI analyst Mark Mahaney went even higher, setting a price target to 930 for Meta stock, up from 750.
"Meta is still facing some macro uncertainties in 2025, and the capex/investment pace is very aggressive, but the company is doing this from a clear position of strength," Mahaney wrote. "A robust online ads market, strong user and engagement growth, ramping monetization, and excellent execution are all on display."
Meta's Q2 operating income increased 37% to $20.4 billion despite a $4.53 billion loss from its metaverse-focused Reality Labs division. Sales for Reality Labs division increased 5% to $370 million.
Meta Stock Up 32% This Year
Coming into the report, Meta stock had an IBD Composite Rating of 94 out a best-possible 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
Meta stock is on the IBD Tech Leaders list.
