Facebook parent Meta announced better-than-expected earnings for Q2 last week, surpassing Wall Street estimates for revenue and profit. The company plans to continue spending heavily on artificial intelligence and virtual reality, despite significant losses in its AR/VR and metaverse businesses. Meta reported a revenue increase of 22 percent from $32 billion for the same quarter last year, representing four straight quarters of growth exceeding 20 percent. The company noted that net income jumped 73 percent to $13.47 billion. Advertising revenue, largely from Facebook and Instagram, was up 22 percent year-over-year.

“Meta provided revenue guidance for the third quarter of $38.5 billion to $41 billion, or $39.75 billion at the middle of the range,” reports CNBC. “Analysts were expecting a forecast of $39.1 billion.”

“Meta said expenses in the second quarter were $24.2 billion, which included the charge from its recent agreement to settle a facial recognition data lawsuit by the state of Texas for $1.4 billion,” CNBC adds. “The company reported capital expenditures of $8.47 billion for the second quarter, below the $9.51 billion that analysts estimated.”

The company plans to continue investing in AI, AR/VR and the metaverse. While Meta has been downsizing broadly, it has also “been spending heavily on cutting-edge technologies like artificial intelligence and the virtual reality and augmented reality tech needed to underpin the metaverse,” according to CNBC, noting it “has been pouring money into data center infrastructure and computing resources.”

“We had a strong quarter, and Meta AI is on track to be the most used AI assistant in the world by the end of the year,” said CEO Mark Zuckerberg in a Q2 Results statement. “We’ve released the first frontier-level open source AI model, we continue to see good traction with our Ray-Ban Meta AI glasses, and we’re driving good growth across our apps.”

Meta joins tech giants such as Microsoft and Alphabet in reporting increased AI costs. Last week, Alphabet reported its capital expenditures jumped 91.4 percent for the quarter over last year, while Microsoft indicated its capital expenditures were up nearly 77.6 percent for the same period.

Meta recently launched Llama 3.1, its “largest and most capable openly available foundation model” and is rolling out Meta AI in more languages and markets. “Zuckerberg said the amount of computing resources required to train Llama 4 will likely be almost 10 times as much as what Meta used to train Llama 3,” and “will grow beyond that,” reports The Wall Street Journal.

Meanwhile, “operating losses in Meta’s Reality Labs unit, which produces the Quest headset and Ray-Ban Meta smart glasses, are set to increase ‘meaningfully’ in the remainder of 2024,” writes WSJ. “Zuckerberg has for years extolled the virtues of a so-called ‘metaverse,’ a virtual space where he expects people to work and spend time in the future. The division had an operating loss of $4.5 billion for the period.”

Related:
Meta Says It Will Continue Spending, as Growth Surges, The New York Times, 7/31/24
Meta Q2 Sales Jump 22% in Wall Street Beat as Its AR/VR and Metaverse Business Loses Billions, Variety, 7/31/24
Meta’s Advertising Growth Is Proof That Hefty AI Spending Is Already Paying Off, CNBC, 7/31/24
Mark Zuckerberg Says India Is the Largest Market for Meta AI Usage, TechCrunch, 7/31/24
Tech’s AI Message to Wall Street: Stop Fretting, Axios, 8/2/24