Meta continues its impressive year, posting a robust financial quarter with $40.6 billion in sales—a 19% increase year-over-year and above Wall Street’s expectations of $40.19 billion. Earnings per share also beat predictions, reaching $6.03 compared to the expected $5.29. However, after-hours trading saw a dip in Meta’s share price due to slightly lower-than-expected daily active user numbers. The company reported 3.29 billion daily active users, short of the anticipated 3.31 billion.
CEO Mark Zuckerberg called this “a dynamic moment” for the tech industry, highlighting Meta’s major investments in AI. These efforts include Meta AI, which now has over 500 million monthly users and is positioned as a top-used AI assistant globally, accessible directly in the Instagram and Facebook search bars. In July, Meta launched its Llama 3.1 405B AI model and recently introduced Movie Gen, an AI tool that can generate video with sound. Meta’s chief financial officer, Susan Li, noted that the current priority is enhancing the user experience of Meta AI before focusing on monetization.
Looking ahead, Meta expects capital expenditures to rise, with projections of $38-$40 billion in 2024 and up to $50 billion in 2025. While analysts are closely watching for returns on these AI investments, some caution that Meta will need to demonstrate it can sustain its AI costs, especially if its core ad business shows any weakness.
Meta is also expanding its hardware lineup, recently unveiling Orion, an augmented reality headset prototype, and launching the affordable Quest 3 mixed-reality headset. These additions reflect Meta’s vision for integrated digital and physical experiences.
Meanwhile, the company faces legal challenges related to children’s mental health, including a 2023 lawsuit by state attorneys general alleging Meta’s platforms are addictive for teens. In a recent positive development for Meta, a judge dismissed a shareholder lawsuit accusing the company of misleading investors about safety measures for young users. Meta also took steps to enhance safety, making Instagram accounts for users under 18 private by default as of September.
This quarter’s results underscore Meta’s commitment to AI and hardware innovation, though it faces pressure to sustain growth amid rising expenses and regulatory scrutiny.
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