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Meta Platforms (META) delivered a stellar Q2 earnings report, propelling its stock to new record highs, as the company’s robust beat-and-raise performance underscored its dominance in digital advertising and AI-driven innovation. . User engagement also remained strong, with daily active users across its Family of Apps reaching 3.48 bln, up 6% yr/yr. Notably, META tightened its FY25 capex guidance to $66-$72 bln from the prior $64-$72 bln range, a move that contrasted with expectations of a significant upward revision following Alphabet’s (GOOG) $10 billion capex hike. This relatively more disciplined approach to capex, combined with strong financials, reassured investors that META is balancing aggressive AI investments with fiscal prudence.

• The advertising business, META’s primary revenue driver, posted robust growth of nearly 22%, fueled by a 9% yr/yr increase in average price per ad and an 11% rise in ad impressions across its Family of Apps. Key to this performance were META’s AI-driven innovations, including Advantage+, Andromeda, and GEM (Global Engagement Model), which have significantly enhanced ad targeting precision and return on ad spend for advertisers.
• Advantage+ leverages machine learning to optimize ad placements in real time, while Andromeda improves content relevance, driving higher engagement. GEM’s ability to predict user behavior has further refined ad delivery, ensuring advertisers achieve better outcomes. These advancements, coupled with the rapid growth of Threads (320 mln monthly active users as of 1Q25) and early monetization efforts, position META’s advertising engine to sustain its momentum.
• Expenses and capex remain a focal point, with META projecting significant increases in both 2025 and 2026. Total costs and expenses rose 12% yr/yr to $27.08 bln in Q2, with full-year 2025 expense guidance raised to $114-$118 bln from $113-$118 bln. The company reiterated that 2026 expense growth will outpace 2025, driven primarily by infrastructure costs -- particularly depreciation from new assets and higher operating expenses for scaling data centers -- and compensation for technical talent, especially AI hires.
• Capital expenditures reached $17 bln in Q2 (+101% yr/yr), with the updated 2025 capex range reflecting investments in servers, data centers, and network infrastructure to support META’s AI ambitions. Looking ahead, META anticipates “another year of similarly significant capital expenditures dollar growth in 2026” to sustain its AI and infrastructure scaling.
• A significant portion of META’s capex is allocated to establishing Meta Superintelligence Labs, a new initiative co-led by high-profile hires like Scale AI’s Alexandr Wang, aimed at advancing personal superintelligence technologies. This lab focuses on developing next-generation AI models, potentially integrating META’s Llama framework with cutting-edge innovations to create highly personalized, intelligent user experiences across its platforms. By prioritizing superintelligence, META aims to enhance its ecosystem -- spanning social media, advertising, and emerging products like AI glasses -- potentially unlocking new revenue streams and reinforcing its leadership in AI-driven consumer tech.
• Reality Labs, META’s hardware and virtual reality division, reported modest revenue growth of 5% to $370 mln, driven by strong sales of Ray-Ban Meta glasses, though tempered by weaker Quest headset sales. However, the segment continues to be a financial drag, posting a substantial operating loss of $4.5 bln in Q2, consistent with its historical trend of over $50 bln in cumulative losses since 2020.

Meta’s Q2 2025 results mark another quarter of exceptional performance, driven by its advertising prowess and leadership in AI innovation. As the company ramps up investments in AI infrastructure and Meta Superintelligence Labs, it is well-positioned to strengthen its competitive moat and drive sustained growth in 2025 and beyond.