Meta's Q2 earnings continue to soar as AI fuels its ad revenue

What you need to know

• Meta's Q2 revenue soared by 22% year-over-year to $47.52 billion, significantly exceeding expectations, driven largely by a 21% increase in AI-powered digital advertising revenue.
• CEO Mark Zuckerberg highlighted the company's chase for "personal super intelligence," backed by substantial investments in AI infrastructure.
• Despite continued losses in Reality Labs, strong sales of Ray-Ban Meta Smart Glasses and Meta Quest headsets brought in $370 million in revenue, 5% more than the $353 million of Q2 2024.

Meta reported its second-quarter earnings on Wednesday, and the company saw an increase of 22% in its total revenue year over year, making $47.52 billion in Q2 alone. Post the earnings announcement, Meta's stocks jumped by approximately 10% as well.

"We've had a strong quarter both in terms of our business and community," said Mark Zuckerberg, Meta founder and CEO, in the press release. "I'm excited to build personal super intelligence for everyone in the world."

Meta attributes these strong financial results to its digital advertising sector, which brought in $46.56 billion, representing approximately 98% of its total revenue, up by 21% year-over-year. This number is seemingly higher than what analysts expected ($44.07 billion). Zuckerberg said during the earnings call today that this strong momentum in digital advertising was driven by AI, with roughly 5% more ad conversions on Instagram and 3% on Facebook.

"Meaningful percentage of our ad revenue now coming from campaigns using one of our generative AI features, this is going to be especially valuable for smaller advertisers with limited budgets, while agencies will continue the important work to help larger brands apply these tools strategically," he added.

That said, the company's Reality Labs continues to operate at a loss of $4.5 billion with sales of $370 million. However, it is slightly above the revenue it generated in the second quarter of 2024 ($353 million).

Ray-Ban Meta Smart Glasses sales more than tripled in Q2, with CFO Susan Li adding that the 5% year-over-year increase was "driven by increased sales of Ray-Ban Meta glasses, and partially offset by lower Quest headset sales". Li said that Meta is ramping up production on these glasses to meet the demand later this year.

Other than that, Zuckerberg indicated that AI advancements also helped users stay on Meta's platforms like Facebook and Instagram for longer and continued to show strong engagement. Daily active people across Meta's platforms reached 3.48 billion, up 6% from a year ago. "Q2, total family of apps, revenue was $47.1 billion, up 22% year over year. Q2, family of apps, ad revenue was $46.6 billion, up 21% or 22% on a constant currency basis," said Li.

Meta has also been aggressively pursuing AI opportunities, so much so that Zuckerberg stated that over the last few months, Meta's AI models have been slowly yet steadily evolving toward super intelligence, "which we define as AI that surpasses human intelligence in every way we think, is now in sight."

Meta spent approximately $17.01 billion, directed toward building more AI infrastructure, like new data centers and advanced research. It is important to note that the company has also adjusted its estimated expenditure for the year ahead to $66 billion to $72 billion, an increase of approximately $30 billion compared to the previous year.

Looking ahead, the company expects a similar uptick in revenue in Q3 as well. Meta says that it could make anywhere between $47.5 billion and $50.5 billion.