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After Google, Tesla and Microsoft, two of the “Big Seven”, released disappointing financial reports in succession, the second quarter financial report of social media giant Meta gave the market a boost.

On July 31, local time, Meta announced its second quarter results for fiscal year 2024 ending June 30, 2024. Revenue for the second quarter was $39.071 billion, up 22% from the same period last year, higher than the market expectation of $38.3 billion; net profit increased 73% year-on-year to $13.465 billion; diluted earnings per share increased 73% year-on-year to $5.16, higher than the market expectation of $4.72. The company's operating profit margin increased from 29% in the same period last year to 38%, flat month-on-month.

Meta expects revenue to reach between $38.5 billion and $41 billion in the next fiscal quarter, with the midpoint of $39.75 billion implying a 24% increase, higher than analysts' expectations of $39.1 billion.

“We had a strong quarter and Meta AI is on track to be the most widely used AI assistant in the world by the end of the year,” said Meta CEO Mark Zuckerberg. “We released our first cutting-edge open source AI model, our Ray-Ban Meta AI glasses continue to gain traction, and adoption is growing nicely.”

Meta's second quarter results. Source: Meta's financial report

However, Meta also pointed out in its financial report that the company raised its guidance range for capital expenditures in 2024, with the median raised from US$37.5 billion to US$38.5 billion, which means that capital expenditures in the second half of the year will be 50% higher than in the first half of the year. In addition, infrastructure costs are expected to be the main driver of capital expenditure growth in 2025, as the company will recognize depreciation and operating costs related to expanding infrastructure.

Meta (Nasdaq: META) closed at $474.83 per share on July 31, with a total market value of $1.20 trillion, and its after-hours increase once exceeded 7%. Wind data shows that Meta's stock price has risen by more than 34% this year.

Advertising business efficiency improved, and the number of daily active users of the app reached 3.27 billion

In terms of business, as a major component of revenue, advertising revenue from social media platforms performed outstandingly, reaching US$38.329 billion in the second quarter, accounting for more than 98% of total revenue. The number of ad impressions increased by 10%, and the average ad price increased by 10%.

In a post-earnings conference call, Meta Chief Financial Officer Susan Li said that Meta has become more efficient in advertising delivery and services, and with the help of new tools, the return on advertising expenditure in the US market has increased by 22%.

Relying on advertising revenue, the Meta application series Family of Apps (FoA), including Instagram, Facebook and WhatsApp, achieved revenue of US$38.718 billion in the first quarter, a year-on-year increase of 22%, higher than the market expectation of US$37.8 billion. Meta said that its family daily active users (DAP) reached 3.27 billion in June this year, a year-on-year increase of 7%. Threads has nearly 200 million monthly active users, and the number of users of the messaging application WhatsApp in the United States has exceeded 100 million this year.

On the other hand, Reality Labs, a Metaverse-related department responsible for AR (augmented reality) and VR (virtual reality) business, still suffered a huge loss of US$4.488 billion in the second quarter, higher than US$3.739 billion in the same period last year. Meta also stated that due to the company's "ongoing product development work and investment in further expanding the ecosystem", the department's operating losses in 2024 will increase significantly year-on-year.

Zuckerberg: I ​​would rather start hoarding computing resources before there is demand

During the conference call, Zuckerberg spent most of his time discussing AI, saying that "the important topic at the moment is naturally AI."

Zuckerberg said that AI progress is driving user engagement growth on its social platforms Facebook and Instagram and helping advertisers find interested audiences. Over time, AI will provide personalized ads for each user: "The importance of AI is that it can be used to improve almost all of our products."

Zuckerberg also talked again about the prospects for open source AI models, saying that the company's latest Llama 3.1 open source model "is as good as any other generative AI model on the market" and that the next version will be better than any existing model.

In response to analysts’ questions about AI capital expenditures, Zuckerberg reiterated his resolve. He admitted that he could not predict when the capital expenditures required for the next generation of AI would stabilize, and that the computing power required to train the next generation of Llama 4 would be ten times that of Llama 3: “Given the long lead times for major infrastructure projects, I would rather take the risk of increasing capabilities before there is demand than wait until it is too late.”

On July 29th, local time, at the 50th SIGGRAPH graphics conference held in Denver, USA, Nvidia CEO Huang Renxun and Zuckerberg had their first public fireside chat. Zuckerberg said that basic AI research is "accelerating" and based on the current AI model technology, the industry still has five years of product innovation space. On the same day, Meta also announced the launch of a new tool called AI Studio, built on the company's latest large model Llama 3.1, allowing users to create, share and design personalized AI chatbots.

On July 23, Meta released its latest open source model Llama 3.1, which includes three parameter sizes: 8B, 70B, and 405B. Meta said that the total downloads of all versions of the Llama series have exceeded 300 million times so far. Zuckerberg said that the emergence of Llama 3.1 "will be a turning point for the industry." He also pointed out that it is unrealistic to believe that "the United States can always lead China by 5-10 years in AI development." It is a big mistake to block China in the AI ​​competition. "It is a reasonable (goal) for the United States to maintain a lead of 6-8 months."