Social media giant, Meta, which operates platforms such as WhatsApp, Instagram, and Facebook, profited a 73% increase in net income for the second quarter of 2024, reaching $13.47 billion.
This rise follows the company’s impressive earnings report, highlighting strong performance in its core advertising business amid ongoing investments in artificial intelligence (AI).
Meta shares were up more than 7.5% in premarket trading, reflecting investor optimism after the company’s second-quarter earnings exceeded analysts’ expectations. The stock had already gained 2.5% by market close on Wednesday.
The positive financial results have reassured investors after a less favorable response to the company’s previous earnings report in April, which highlighted expected slower growth and increased spending on AI projects.
Meta’s shares listed in Frankfurt also saw a significant rise, climbing more than 7% on Thursday. This uptick marks a positive shift from the April earnings report, which had led to a broader selloff in the tech sector as investors questioned the potential returns on big tech’s AI investments.
CEO Mark Zuckerberg has been actively reassuring investors about Meta’s substantial investments in AI. While the company has increased the lower end of its capital expenditure range to accommodate these projects, Zuckerberg emphasized that the benefits of AI investments are starting to materialize. He stressed that the strong performance in Meta’s core advertising business justifies the costs associated with AI development.
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Zuckerberg, co-founder and leader of Meta, has seen his net worth rise to an estimated $166.6 billion, an increase of $4 billion, or 2.5%, in the last 24 hours. This boost solidifies his position as the fifth richest person globally, following Larry Ellison, Bernard Arnault, Jeff Bezos, and Elon Musk.
Meta’s positive earnings report contrasts with recent results from other major tech companies, which have faced investor skepticism over their AI investments. Microsoft and Tesla shares fell after their respective earnings reports, and Google parent Alphabet also saw a decline. Analysts at UBS expressed concerns that market hype around AI may not translate into immediate or tangible returns, as reflected in their downgrade of Tesla from neutral to sell.
Investors will be closely watching Amazon’s upcoming second-quarter earnings report,. The e-commerce and cloud computing giant is anticipated to reveal increased capital spending on AI, similar to trends seen with Microsoft and Google. According to LSEG data, Amazon’s capital investments are projected to rise by 43%, totaling over $16 billion, with a significant portion allocated to cloud computing and generative AI infrastructure. Amazon shares rose 1.3% in premarket trading ahead of the report.
