Meta Platforms (META) stock is surging Thursday after the parent company of Facebook and Instagram beat top- and bottom-line expectations for its second quarter and issued solid guidance for its third quarter.
In the three months ended June 30, Meta's revenue increased 22.1% year-over-year to $39.1 billion, due in part to a 7% rise in its family daily active people (DAP) users to 3.3 billion. Meta also said its earnings per share (EPS) jumped more than 73% from the year-ago period to $5.16.
"We had a strong quarter, and Meta AI is on track to be the most used artificial intelligent (AI) assistant in the world by the end of the year," said Meta Platforms' CEO Mark Zuckerberg in a statement. "We've released the first frontier-level open source AI model, we continue to see good traction with our Ray-Ban Meta AI glasses, and we're driving good growth across our apps."
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The results topped analysts' expectations. Wall Street was anticipating revenue of $38.3 billion and earnings of $4.73 per share, according to Yahoo Finance.
For the third quarter, Meta anticipates revenue in the range of $38.5 billion to $41 billion. The midpoint of this range, $39.75 billion, came in ahead of analysts' expectations of $39.1 billion.
Meta also raised the low end of its full-year capital expenditures outlook, now anticipating a range of $37 billion to $40 billion from the previous guidance of $35 billion to $40 billion.
In the company's earnings call, Chief Financial Officer Susan Li said Meta expects "expect significant capex growth in 2025" as it invests to support AI research and product development efforts.
Is Meta Platforms stock a buy, sell or hold?
Meta Platforms is one of the best-performing Magnificent 7 stocks this year, up more than 47% on a price basis. Unsurprisingly, the social media giant is one of Wall Street's favorite stocks.
According to S&P Global Market Intelligence, the average analyst target price for META stock is $551.62, representing an upside of more than 6% to current levels. Additionally, the consensus recommendation is Buy, teetering on Strong Buy.
Financial services firm Wedbush is one of the most bullish outfits on META stock with an Outperform rating (equivalent to Buy) and a $600 price target.
"Meta continues to deliver healthy engagement trends," says Wedbush analyst Scott Devitt. "The company has a number of drivers of sustainable growth in place, including continued adoption of Advantage+ campaigns and improving monetization across Reels and messaging ads."
The analyst adds that the communication services stock's "risk/reward is attractive given the improved growth trajectory in the second half, broadly healthy digital advertising trends, and optionality related to future AI monetization."
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