clock: The Fed's “independence” is a myth. There's someone here who actually calls the shots
Meta Platforms (META) provided a strong 2025 revenue report on Wednesday, pushing ahead of expectations and to an all-time high of $775, retaining those profits across the call. The company's outperformance was driven by a surge in advertising revenue, strong user engagement across the app's family, and a clear commitment to artificial intelligence investment, even at the expense of higher costs and capital expenditures. Investors welcomed print material and sent stocks over 10% as management provided bullish guidance in the third quarter, outlining an ambitious roadmap fixed on long-term bets on AI, cloud-scale infrastructure and super intelligence.
Meta reported earnings per share at $7.14, well above the $5.92 consensus, but revenues reached $448 billion compared to $47.52 billion. The 22% year-on-year revenue growth coincides with the pace seen a year ago, reflecting strength in both impression and pricing. Daily active people in Meta Family apps rose to 3.48 billion, while analyst forecasts rose from 3.45 billion, up from 3.43 billion in the first quarter, highlighting the company's ability to continue expanding engagement at scale. Net income skyrocketed 36% to $18.34 billion, driving an operating profit margin of 43%.
Ad revenues once again provided the backbone, totaling $465.6 billion compared to the $43.97 billion forecast. CFO Susan Lee highlighted that impression growth has accelerated in all regions led by the Asia-Pacific region, with an average price per ad up 9% due to improved advertisers' demand and targeting. Meta said the new AI-powered AD recommendations and ranking systems have significantly accelerated the conversion benefits. Zuckerberg highlighted the increasing use of generator AI tools in ad creatives. This is a trend that is particularly valuable for small advertisers who lack large internal creative teams.
Beyond advertising, Meta is seeing traction in other revenue lines. WhatsApp's paid messaging and meta-validated subscriptions have increased the app's family of “other revenue” by 50% to $583 million. Li notes that although the thread feed ad rollout and WhatsApp update tab is still early and limited short-term revenue contributions, it may make sense as a recruitment scale. Video engagement remains a key growth lever. Instagram video times rose more than 20% year-on-year, but Facebook saw similar increases in the US
In terms of AI, Zuckerberg outlined his bold vision for “personal super intelligence.” He said Meta is framed elite talent and unparalleled computing power, with multi-gigawatt clusters such as Prometheus and Hyperion being under construction. The CEO argued that super intelligence, which he defined as AI that surpasses human intelligence in all respects, is “visible now.” He emphasized that the technology focuses on personal empowerment that enables creativity, connection and community building rather than pure automation. The company's meta AI already counts more than 1 billion monthly actives, and WhatsApp is the biggest driver for queries. Zuckerberg said the Llama model is increasingly integrated throughout the backend process, from thread content recommendations to Facebook's bug resolution.
Reality Labs, Meta's AR/VR division, continued to drag profitability, but the $4.53 billion loss of revenue of $370 million was pretty much in line with expectations. Zuckerberg defends ongoing investment, pointing to the strong momentum of Ray-Ban Meta Glasses and the upcoming Oakley Meta HSTNS, aiming to expand AI into everyday life. He repeated that AI glasses could ultimately become the main way users experience tensions, and justifying the billions poured into real-life labs.
Cost and CAPEX were key themes in the call. Total costs and expenses increased 12% year-on-year to $27.08 billion. Currently, full-year 2025 costs are expected to range from $114 billion to $118 billion, an increase in the lower end of previous guidance ($11.318 billion). Li flagged the growth in expenses in 2026 surpassed 2025, with infrastructure depreciation and technology adoption as the biggest driver. Compensation related to hiring Meta's ongoing AI employment. This includes SAI CEO Alexandr Wang, a high-profile addition to co-lead Meta Superintelligence Labs, making him the second biggest contributor. R&D costs increased 23% year-on-year, reflecting these investments.
Capital expenditures were $17 billion in the second quarter driven by server, data center and network build-outs. Management has increased its CAPEX guidance for 2025 from $662 million to $72 billion. Li said the second quarter included $15.1 billion in non-marketable equity investments, including minority stakes in scale AI, which highlights the scale of META's infrastructure and AI ambitions. In the future, she proposed that Meta could explore financial partnerships to collaborate on data centers.
The guidance further reassured investors. Meta forecasts third quarter revenues of between $47.5 billion and is comfortable above $46.144 billion. The company did not provide sales guidance for the fourth quarter, but warned that growth is likely to be slower than in the third quarter due to strong year-over-year. Despite rising infrastructure costs supported by increasing AI-driven AD efficiency, the operating margin is expected to be healthy. Li predicted an effective tax rate of 19-20% for both Q1 and FY26.
The market response was immediate. Stocks have skyrocketed to a record $775 with more than 10%, with investors showing approval of Meta's aggressive AI strategy despite the bulging costs. Analysts noted that Zuckerberg's bright commentary on AI, including repeated references to Superintelligence and AI Glasses, resonated with a market that is passionate about long-term growth narratives. Capex's trajectory was steep, but surrounded as essential to staying ahead of the AI race.
In summary, Meta's second quarter report showed companies that operate on fire all cylinders, far exceeding expectations on advertising strength, user growth, and refueling results from AI adoption. Though expenses and CAPEX are inflated, management guidance and AI vision have reassured investors that spending is consistent with opportunities. The real-life labs are still deep and red, and the challenges remain as European regulatory risks loom. However, Wednesday's results revealed one thing. Meta is leaning violently towards an AI-driven future.
