"Shares of Meta Platforms sank despite the social media company reporting strong third-quarter results that easily topped analyst estimates, as investors fret over its capital expenditures (capex) spending. The company said it needs more computing power for its artificial intelligence (AI) initiatives, and as such raised the low end of its capex budget this year from a prior outlook of $66 billion to $72 billion to a new range of $70 billion to $72 billion. It also expects a big increase next year as well."
"While the market reaction may not seem like it, Meta turned in very strong Q3 results. Revenue for the quarter surged 26% year over year to $51.24 billion, which was an acceleration from the 22% revenue growth it saw in Q2. Adjusted EPS, meanwhile, climbed by 20% to $7.25. Analysts were only looking for revenue of $49.4 billion and adjusted EPS of $6.69, as compiled by LSEG."
"Meta's advertising growth was led by an 14% increase in ad impressions and a 10% jump in average price per ad. The company's AI efforts have led to better content recommendations, which is leading to users spending more time on its sites. This is resulting in more ad impressions. It also pointed to its new Vibes AI creation tool as helping increase user growth and retention."
Meta delivered robust Q3 financials with revenue up 26% to $51.24 billion and adjusted EPS rising 20% to $7.25, beating analyst estimates. Advertising revenue increased 26% to $50.1 billion, driven by a 14% rise in ad impressions and a 10% jump in price per ad. Reality Labs revenue grew 74% to $470 million but posted a $4.4 billion loss. AI initiatives improved content recommendations and ad targeting, boosting user time and ad performance. Management raised the year’s capex outlook to $70–$72 billion and signaled a much larger spend increase next year, prompting investor concern.
Read at The Motley Fool
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