Meta Platforms (META) is set to report its second-quarter earnings on Wednesday, July 30. While expectations are high following strong year-to-date stock performance, concerns remain around rising AI-related spending and slowing ad revenue growth.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
What Wall Street Expects from Meta’s Q2 Report
On Wall Street, analysts expect Meta to report earnings per share of $5.88 for the second quarter, up from $5.16 a year ago. Meanwhile, revenue is expected to grow 15% year-over-year to $44.8 billion in Q2.
Analysts will closely monitor user growth, ad pricing, and the volume of ads served. As the company pours resources into AI and navigates growing scrutiny of its ad practices, the upcoming quarterly results could be crucial in shaping its short-term outlook.
All Eyes on Meta’s AI Push
In recent weeks, Meta has poached leading AI researchers from rival companies, reportedly offering compensation packages exceeding $100 million. Notably, CEO Mark Zuckerberg invested $14.3 billion in Scale AI, naming its founder, Alexandr Wang, to head the company’s newly launched Superintelligence Lab. At the same time, Zuckerberg has committed to investing billions in AI infrastructure, including plans to build a data center the size of Manhattan.
So far, investors have supported Meta’s heavy spending on AI. The stock is up 20% year-to-date. However, in its upcoming Q2 report, Meta will need to prove that its core business remains strong enough to handle the rising costs of its long-term AI investments.
Meta’s Ad Business Faces Crucial Test
Meta earns almost all of its revenue from ads shown to over 3.4 billion users on its apps.
This year, the digital ad market has faced pressure due to tariffs. These import taxes have made things harder for key industries that often buy online ads, including e-commerce, packaged goods, and auto companies.
Another potential risk for Meta’s second-quarter results is its indirect exposure to China. While Meta’s apps aren’t available in China, Chinese advertisers, particularly low-cost retailers like PDD’s (PDD) Temu and Shein, were among the biggest ad spenders on Meta’s platforms. However, as they struggle amid the ongoing trade war, their reduced spending could weigh on Meta’s performance.
Is Meta a Good Stock to Buy Now?
On TipRanks, META stock has a consensus Strong Buy rating among 43 Wall Street analysts. That rating is based on 39 Buys and four Holds assigned in the last three months. The average META price target is $760, which is 8.4% above the current trading level.
