Meta Platforms Inc. on Wednesday issued better-than-expected guidance for the current quarter after reporting second-quarter results that beat analysts’ estimates on the top and bottom lines.
Meta Platforms Inc (NASDAQ:) rose about 7% in premarket trading on Thursday.
For the three months ended June 30, the company earned $5.16 per share on revenue of $39.07 billion, beating estimates of $4.7 billion and $38.26 billion, respectively.
Daily active people, or DAP, reached 3.27 billion, up 7% in the second quarter compared to the same period a year earlier.
Capital expenditures were $8.47 billion in the second quarter, down from $6.72 billion in the first quarter.
For the third quarter, the company expects total revenue to be between $38.5 billion and $41 billion, or $39.75 billion at the midpoint, beating Wall Street estimates of $39.09 billion.
The upbeat revenue outlook comes as the company raised the lower end of its annual capital spending forecast to $37 billion to $40 billion from $35 billion to $40 billion previously, but overall full-year spending guidance remained unchanged at $96 billion to $99 billion.
However, the company said it “expects infrastructure costs to be a significant driver of expense growth next year as we recognize the depreciation and operating costs associated with our expanded infrastructure footprint.”
Analysts at KeyBanc Capital Markets reiterated an overweight rating on META stock following the report and raised their price target to $560 from $540.
“We believe Meta’s Q2 results reinforced the core business of seeing AI revenues today while AI assistants and agents generate returns in the medium term,” they said.
“As AI creates more efficiencies for merchants around the world, we believe this can lead to further share gains and support consistent 10%+ annual ad revenue growth.”
Similarly, Stifel analysts also raised their price target on Meta shares from $550 to $590, noting that the higher bottom line of capital spending expectations was the “only real difference” in the print.
“It’s hard to deny that the Capex increase is significant, but we believe Meta’s AI initiatives are already paying off (better engagement, advertiser tools that increase incremental budgets), with more to come,” Stiefel wrote.
Yassin Ibrahim contributed to this report.