Meta founder and CEO Mark Zuckerberg speaks during the Meta Connect event at Meta headquarters in Menlo Park, California, on September 27, 2023.
Josh Edelson | AFP | Getty Images
After is expected to report second-quarter earnings on Wednesday after the close of regular trading.
Here’s what analysts polled by LSEG expect:
- earnings per share: $4.73
- Income: $38.31 billion
Wall Street expects sales to rise 20% from $32 billion a year earlier as Meta’s business continues to recover from a brutal 2022, when a tough economy led advertisers to cut spending. Meta’s ad revenue is expected to grow 19% to $37.6 billion, according to StreetAccount.
While the company’s core ad unit has been the main driver of the stock, investors are increasingly focused on Meta’s heavy spending on artificial intelligence and the metaverse. Like other tech giants, Meta has poured money into data center infrastructure and computing resources needed to train AI models and run massive workloads.
CEO Mark Zuckerberg acknowledged last week that Meta and its ilk may be overspending on their AI technologies, but said they have little choice if they want to position themselves for future growth.
“The downside of being behind is that you’re out of position for the most important technology for the next 10 to 15 years,” Zuckerberg said in a podcast with Bloomberg’s Emily Chang, echoing similar comments from Alphabet CEO Sundar Pichai on his company’s earnings call last week.
In April, Meta said its capital spending for 2024 would range from $35 billion to $40 billion, up from the company’s previous forecast of $30 billion to $37 billion.
Earlier this year, Zuckerberg said Meta’s computing infrastructure would include 350,000 Nvidia H100 graphics cards, the expensive computer chips used to train so-called large language models and related artificial intelligence software, by the end of 2024. Additionally, Zuckerberg said at the time that Meta’s computing infrastructure would contain “almost 600,000 H100 compute equivalents if you include other GPUs,” which equates to spending billions of dollars.
Regarding Google’s AI investments, Pichai told analysts last week that “When we go through a curve like this, the risk of underinvestment is dramatically greater than the risk of overinvestment for us here.”
As part of Meta’s AI push, the company last week unveiled the latest version of its Llama AI model, which consists of three different variants that developers can access and use for free, underscoring Meta’s efforts to ensure that its AI technology is on par with OpenAI and Google.
Heading into Meta’s report on Wednesday, the digital ad market has shown some signs of weakness. Alphabet reported lower-than-expected ad revenue from YouTube last week and on Tuesday, Pinterest issued disappointing guidance for the third quarter, which sent the stock plunging 15% after hours.
Pinterest CFO Julia Brau Donnelly told analysts on an earnings call that while the tech, auto and financial services sectors were “strengths” for the company’s advertising business, growth in those sectors “offset partly by the softness of food and drink advertisers. , who navigate wider headwinds within this category.”
Meta’s Reality Labs division, which houses its metaverse technologies, is still bleeding cash. Analysts expect the unit to record an operating loss of $4.55 billion, according to StreetAccount. That would bring its total losses since the end of 2020 to about $50 billion. Revenue at the unit is expected to show a 34% year-over-year increase to $371 million, mainly from Quest VR headsets and smart glasses.
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