Meta achieves record revenue but faces sell-off, AI spending emerges as the biggest divergence

July 30th. After the U.S. market closed on Wednesday, Meta released its second-quarter earnings report. The company's revenue was $60.8 billion, a year-on-year increase of 28%, higher than market expectations; earnings per share were $6.18, lower than expected and also lower than the $7.14 in the same period last year. Net profit decreased from $18.34 billion to $15.85 billion, a 14% year-on-year decrease. After the financial report, Meta's stock price experienced a significant decline in after-hours trading.

The advertising business remained strong. The second-quarter advertising revenue was approximately $59.36 billion, a 27% year-on-year increase; the Family of Apps had a daily active user base of 3.6 billion, with Instagram reaching 2 billion daily actives, and Threads reaching 500 million monthly actives. The application matrix formed by Facebook, Instagram, WhatsApp, and Threads is still expanding, and the advertising business is maintaining high growth.

However, the market is more concerned about costs and cash flow. Meta's total costs and expenses in the second quarter rose to $42.03 billion, a significant 55% year-on-year increase, including legal expenses and severance costs. Investment in AI infrastructure continued to expand, with capital expenditures reaching $31.08 billion, an 83% year-on-year increase; free cash flow decreased from $8.55 billion in the same period last year to $7.84 billion.

The company also adjusted its full-year capital expenditure range to $130 billion to $145 billion. D.A. Davidson maintains a Buy rating but has lowered the target price from $850 to $700, citing third-quarter revenue guidance indicating a slowdown in growth. Aptus Capital also pointed out that while the lower limit of capital expenditure has been raised, there is no stronger revenue guidance to match.

Subsequent market focus will be on whether third-quarter revenue can accelerate again, and whether AI advertising tools, AI assistants, and computing power businesses can provide a clear return.