Meta Smashes Q2 Estimates, Bets Big on AI and Superintelligence as Shares Hit Record High

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Meta Platforms (META) delivered a powerful second-quarter 2025 earnings report on Wednesday, with results that topped expectations and pushed shares to an all-time high of $775, holding those gains throughout the call. The company’s outperformance was driven by surging advertising revenue, strong user engagement across its family of apps, and a clear commitment to artificial intelligence investments, even at the cost of higher expenses and capital spending. Investors welcomed the print, sending the stock up more than 10%, as management provided bullish guidance for the third quarter and outlined an ambitious roadmap anchored in AI, cloud-scale infrastructure, and long-term bets on superintelligence.

Meta reported earnings per share of $7.14, well ahead of the $5.92 consensus, while revenue hit $47.52 billion versus $44.80 billion expected. The 22% year-over-year revenue growth matched the pace seen a year ago and reflected strength in both impressions and pricing. Daily active people across Meta’s family of apps climbed to 3.48 billion, topping analyst forecasts of 3.45 billion and up from 3.43 billion in Q1, underscoring the company’s ability to keep expanding engagement on a massive scale. Net income surged 36% to $18.34 billion, driving a 43% operating margin.

Advertising revenue once again provided the backbone, totaling $46.56 billion compared with expectations of $43.97 billion. CFO Susan Li highlighted that impression growth accelerated across all regions, led by Asia-Pacific, while average price per ad rose 9% on stronger advertiser demand and improved targeting. Meta said new AI-powered ad recommendation and ranking systems drove significant conversion gains — roughly 5% more on Instagram and 3% on Facebook. Zuckerberg emphasized that generative AI tools are increasingly being used for ad creative, a trend especially valuable for smaller advertisers who lack large in-house creative teams.

Beyond advertising, Meta is seeing traction in other revenue lines. WhatsApp paid messaging and Meta Verified subscriptions boosted Family of Apps “other revenue” by 50% to $583 million. Li noted the rollout of ads in Threads feed and WhatsApp Updates tab is still early, with limited near-term revenue contribution, but could become meaningful as adoption scales. Video engagement remains a key growth lever: Instagram video time rose more than 20% year-over-year, while Facebook saw similar increases in the U.S.

On the AI front, Zuckerberg outlined his bold vision for “personal superintelligence.” He said Meta is assembling elite talent and unparalleled compute capacity, with multi-gigawatt clusters like Prometheus and Hyperion under construction. The CEO argued that superintelligence, which he defined as AI surpassing human intelligence in every way, is “now in sight.” He stressed that the technology will be focused on personal empowerment — enabling creativity, connection, and community building — rather than pure automation. The company’s Meta AI already counts over a billion monthly actives, with WhatsApp being the largest driver of queries. Zuckerberg said Llama models are being increasingly integrated across back-end processes, from content recommendation in Threads to bug resolution in Facebook.

Reality Labs, Meta’s AR/VR division, remained a drag on profitability, though its $4.53 billion operating loss on $370 million in revenue was roughly in line with expectations. Zuckerberg defended the continued investment, pointing to strong momentum in Ray-Ban Meta glasses and the upcoming Oakley Meta HSTNs, which aim to extend AI into everyday life. He reiterated that AI glasses could eventually become the primary way users experience superintelligence, justifying the billions poured into Reality Labs.

Expenses and CapEx were a key theme on the call. Total costs and expenses rose 12% year-over-year to $27.08 billion. Full-year 2025 expenses are now expected to range between $114 billion and $118 billion, raising the low end of prior guidance ($113–118 billion). Li flagged that 2026 expense growth will outpace 2025, with infrastructure depreciation and technical hiring being the largest drivers. Compensation tied to Meta’s ongoing AI hiring spree, including the high-profile addition of Scale AI CEO Alexandr Wang to co-lead Meta Superintelligence Labs, will be the second-largest contributor. R&D costs jumped 23% year-over-year, reflecting these investments.

Capital expenditures were $17 billion in Q2, driven by servers, data centers, and network buildouts. Management raised its 2025 CapEx guidance to $66–72 billion, up from $64–72 billion prior. Li noted that Q2 included $15.1 billion in non-marketable equity investments, including the minority stake in Scale AI, underscoring the scale of Meta’s infrastructure and AI ambitions. Looking ahead, she suggested Meta could explore financial partnerships to co-develop data centers, an acknowledgment of the massive funding demands tied to multi-gigawatt clusters.

Guidance further reassured investors. Meta forecast Q3 revenue of $47.5–50.5 billion, comfortably above the $46.14 billion consensus. While the company did not provide Q4 sales guidance, it cautioned growth will likely slow relative to Q3 as it laps a strong prior-year period. Operating margins are expected to remain healthy despite rising infrastructure costs, supported by AI-driven ad efficiency gains. Li projected an effective tax rate of 19–20% for both Q1 and FY26, up from Q2’s unusually low 11% due to stock-based compensation effects.

The market reaction was immediate: shares surged more than 10% to a record $775, with investors signaling approval of Meta’s aggressive AI strategy despite ballooning expenses. Analysts noted that the upbeat commentary on AI, including Zuckerberg’s repeated references to superintelligence and AI glasses, resonated with a market eager for long-term growth narratives. The CAPEX trajectory, while steep, was framed as essential to staying ahead in the AI race — a framing Wall Street appeared to accept.

In summary, Meta’s Q2 2025 report showcased a company firing on all cylinders operationally, with advertising strength, user growth, and AI adoption fueling results well above expectations. While expenses and CapEx are ballooning, management’s guidance and AI vision reassured investors that the spending is matched with opportunity. With Reality Labs still deeply in the red and regulatory risks in Europe looming, challenges remain. But Wednesday’s results made one thing clear: Meta is leaning hard into the AI-driven future — and Wall Street is buying in.