Meta (META) will report its third quarter earnings after the bell on Wednesday as the company continues its AI spending spree. The social media giant previously said it would spend $72 billion in 2025 building out its AI infrastructure and hiring AI specialists, up from an initial estimate of $65 billion.
So far, that’s included investing $14.3 billion in Scale AI (SCAI.PVT) and hiring its CEO as chief AI officer; plowing at least $1.5 billion into a new data center in El Paso, Texas; and entering into a $27 billion financing deal with Blue Owl Capital to pay for its massive Hyperion data center in Richland Parish, La, and pouring millions more into poaching AI experts from rival tech firms, including OpenAI and Apple.
At the same time, the company laid off some 600 workers from its AI division, continuing a trend among Silicon Valley heavyweights cutting back on employee ranks.
For Q3, Meta is expected to report earnings per share of $6.72 on revenue of $49.6 billion, according to Bloomberg consensus estimates. That’s up from the $6.03 per share and $40.6 billion the company reported in the same quarter last year.
Advertising revenue is anticipated to top out at $48.6 billion, up 21% year over year from the $40.3 billion the segment brought in Q3 2024.
Unlike cloud providers Amazon (AMZN), Google (GOOG, GOOGL), and Microsoft (MSFT), which are also spending heavily on AI, Meta isn’t angling to sell its AI offerings to enterprises. Instead, the company is using the technology to power its advertising business and drive ever more user engagement.
CEO Mark Zuckerberg told analysts and investors during the company’s Q2 earnings call in July that the effort is starting to pay off.
“On advertising, the strong performance this quarter is largely thanks to AI unlocking greater efficiency and gains across our ads system … It’s driven roughly 5% more ad conversions on Instagram and 3% on Facebook,” he said.
“AI is significantly improving our ability to show people content that they’re going to find interesting and useful. Advancements in our recommendation systems have improved quality so much that it has led to a 5% increase in time spent on Facebook and 6% on Instagram just this quarter,” Zuckerberg added.
But the pressure is on for him to continue to prove Meta’s AI is paying off in Q3. It doesn’t help that Meta is also reporting its earnings the same day as advertising rival Google.
“With reports of additional AI hiring, potential LLM & infrastructure deals, and OpenAI social competition, we think updates on Meta’s AI outlook will be a call focus and critical for sentiment,” BofA Global Research’s Justin Post wrote in a note to investors.
