Meta's stock soars 11% on strong projected sales figures
Meta Boosts AI Investments Amid Robust Advertising Growth
Meta Platforms, the parent company of Facebook and Instagram, is significantly increasing its investments in artificial intelligence (AI) as it races to stay at the forefront of the industry. This move comes as the company anticipates its 2026 expense growth rate to surpass that of 2025, due to rising costs for data center infrastructure and employee compensation.
The AI push is evident in Meta's recent moves. It has invested $14.3 billion for a stake in startup Scale AI and poached its CEO, Alexandr Wang. The company has also introduced an AI-driven image-to-video ad creation tool under its Advantage+ suite.
These investments are supporting Meta's strong growth in advertising, which continues to generate robust revenue and user engagement. In the second quarter of 2025, Meta reported sales of $47.5 billion, surpassing analysts' average estimate. The company has also forecasted third-quarter website revenue above analysts' estimates.
Meta's AI-powered ad recommendations are driving growth, with about 5% more conversions on Instagram and 3% on Facebook. This growth is expected to continue, with Instagram accounting for more than half of Meta's ad revenue in the US this year.
Despite the surge in spending, Meta's financial performance remains stable. The strong advertising business generates cash flow that supports this scale of capital spending without undermining financial stability. This is evident in the share price gains following the earnings announcement and revised forecast.
However, Meta is not without challenges. Regulatory issues both in the US and abroad continue to pose a threat. US antitrust regulators are suing Meta to force it to restructure or sell Instagram and WhatsApp, with the court papers due in September and a ruling expected later this year.
In conclusion, Meta's AI-driven investments are substantially raising its capital expenditures, with the company planning to spend between $66 billion and $72 billion in 2025. This increased spending is enabled by and contributes to the continued growth of its advertising business and overall financial performance. Despite regulatory challenges, Meta remains committed to its AI strategy, offering large pay packages to researchers from rival firms to revitalise its AI push.
- Meta's increased investments in artificial intelligence (AI), totaling between $66 billion and $72 billion in 2025, aim to keep the company at the forefront of the technology industry.
- The integration of AI in Meta's advertising business, as seen in the AI-driven ad creation tool and AI-powered ad recommendations, is a significant factor driving the company's robust revenue and user engagement.
