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Meta to Report Third Quarter Results with AI and Ad Sales in Focus (Video)

Umito October 30, 2024

Facebook’s parent company, Meta (META) will report its third-quarter results after the closing bell on Wednesday. The social media giant has quickly become an artificial intelligence powerhouse in its own right, on par with Microsoft (MSFT), Google (GOOG, GOOGLE) and Amazon (AMZN), and investors are on board.

Meta stock is up 66% year to date and 26% over the past three months. For comparison, Amazon shares are up 25% over the past three months, while Google shares are up 21%. Microsoft’s stock price, meanwhile, rose 15% during the same period.

For the third quarter, Wall Street expects Meta to report earnings per share (EPS) of $5.25 on revenue of $40.2 billion, according to analyst estimates compiled by Bloomberg. The company reported earnings per share of $4.50 on revenue of $34.1 billion in the same quarter last year.

Advertising revenue is expected to rise to $39.7 billion from $33.6 billion. during the third quarter of 2023. Meta’s Reality Labs segment, which includes sales of its Quest line of augmented reality headsets, is expected to generate $312 million, up from $210 million.

Meta’s AI strategy includes deploying its Llama family of models across its consumer offerings and advertising products. It also offers the platform as open source software. To this end, Meta reported that organizations ranging from Accenture (ACN) and DoorDash (DASH) to Goldman Sachs (GS) use Llama to develop their own AI software.

Meta gains follow a report from The Information that the company is working on its own search functionality for its Meta AI service, which will allow users to ask questions and get answers about current events. The goal is to ensure that Meta will no longer need to rely on Google or Microsoft’s search engines to answer certain user queries.

September 25, 2024, USA, Menlo Park: At the Meta Connect developers conference, Mark Zuckerberg, head of the Facebook Meta group, presents the prototype of computer glasses capable of displaying digital objects in transparent lenses. Photo: Andrej Sokolow/dpa (Photo by Andrej Sokolow/photo alliance via Getty Images) — Meta CEO Mark Zuckerberg demonstrates a prototype of the company’s Orion augmented reality glasses at Meta Connect in October. (Photo by Andrej Sokolow/photo alliance via Getty Images) (photo alliance via Getty Images)

The company also just won a successful Meta Connect conference, where it demonstrated a working prototype of its Orion augmented reality glasses. The device, which is still in its early stages, is intended to serve as a pair of glasses that allow you to talk with other users via holograms projected onto the real world.

CEO Mark Zuckerberg and company also discussed the success of Meta’s Ray-Ban Meta smart glasses, which are gaining popularity, and launched their entry-level Quest 3S augmented reality headset.

But all this AI and hardware development costs a lot of money. In the third quarter, Meta is expected to report capital expenditures of $11 billion, a dramatic increase from the $6.76 billion the company spent in the third quarter of last year. And the spending isn’t likely to stop anytime soon. Wall Street expects capital spending to exceed $12 billion in the fourth quarter.

Beyond spending concerns, Meta also faces a host of high-profile legal challenges, including an FTC antitrust lawsuit alleging the company acts as an illegal monopoly, as well as lawsuits claiming Meta is harmful to mental health of adolescents.