Meta Platforms Inc. announced its third-quarter 2024 earnings on October 30, surpassing expectations due to robust ad revenue and AI advancements. As the largest social media company, Meta—parent to Facebook and Instagram—revealed plans to increase infrastructure investments significantly in 2025, driven by its growing focus on AI.
Key takeaways
For the third quarter of 2024, Meta reported record-breaking revenue of US$40.59 billion—a 19% increase compared to the same period last year—and net income of US$15.69 billion, a 35% rise, equating to US$6.03 per share. These results outperformed Wall Street forecasts of US$40.29 billion in revenue and US$5.25 earnings per share, as per data from LSEG.
Meta's capex increased to US$9.2 billion for the third quarter of 2024, driven by heavy investments in AI infrastructure and Reality Labs, which houses its AR and VR projects. CEO Mark Zuckerberg confirmed that Meta's AI initiatives, along with advancements in Reality Labs, continue to demand significant funding.
Meta raised its annual capex projection to US$38-40 billion, slightly up from the previous US$37-40 billion range. Ken Dorell, Meta's Director of Investor Relations, reiterated that these investments in AI and infrastructure are vital to Meta's long-term strategy, preparing investors for further increases in 2025 to support Reality Labs, AI growth, and infrastructure expansions.
Daily active users across Meta's suite of apps rose by 5% compared to the same period last year to 3.29 billion, slightly below the 3.31 billion expected. This growth stemmed from increased engagement on Facebook, Instagram, and WhatsApp, with strong usage in markets like the US and Brazil. Meta attributes this steady growth to AI-driven content recommendations and new features, maintaining high engagement.
Meta shares have surged 70% since the beginning of the year, far exceeding Google's 30% and Microsoft's 18% gains, reflecting strong investor confidence in Meta's AI initiatives and ad-targeting capabilities. Deutsche Bank highlighted Meta's AI-driven advertising share gains, while Bank of America ranked Meta as a top AI stock due to its robust ad revenue growth and user engagement, as reported by MarketBeat and Investopedia.
Meta's Reality Labs, responsible for products like the Meta Quest headset and Orion AR glasses, posted a US$4.4 billion operating loss. CFO Susan Li indicated these losses will likely grow as development costs remain high. Despite investor concerns over profitability, Meta's continued investment in immersive tech, including Ray-Ban smart glasses, aligns with its long-term vision.
Eyewear manufacturer EssilorLuxottica reported that Ray-Ban Meta smart glasses are now top sellers in Ray-Ban stores across Europe, the Middle East, and Africa. Truist Securities analysts also noted Meta's AI investments could increase user engagement across social platforms. Meanwhile, Threads—Meta's alternative to X—reached nearly 275 million users within its first year, reports Forbes citing Zuckerberg.
"We had a good quarter driven by AI progress across our apps and business," said Zuckerberg in a statement. "We also have strong momentum with Meta AI, Llama adoption, and AI-powered glasses."
Zuckerberg announced that Llama 4, Meta's forthcoming AI model set for release next year, is progressing on a large scale, trained on over 100,000 H100 GPUs, a capacity exceeding any known infrastructure. This setup references Elon Musk's xAI datacenter, similarly reported to use a 100,000-chip cluster. Llama 4 promises advanced capabilities, including new modalities, improved reasoning, and faster processing, supporting Meta's expanding AI focus.
Analysts react: User growth miss and 2025 jump in AI spending are concerning
Meta projects revenue for the fourth quarter of 2024 between US$45 billion and US$48 billion, with a midpoint above the US$46.3 billion analyst consensus.
Jesse Cohen, an analyst at Investing.com, noted that Meta's strong quarter reinforces the trend of advertisers favoring major platforms like Facebook and Instagram over smaller networks like Snap, as reported by Yahoo Finance.
Cohen added that although AI is a major growth driver for Meta, investors are concerned about its forward guidance and the rising costs associated with AI development.
Jasmine Enberg, principal analyst at eMarketer, noted that Meta's strong revenue and guidance could keep investors optimistic despite high AI spending. However, she expressed concerns about slowed user growth, adding that Meta may need to increase per-user revenue as growth plateaus, as noted by Business Insider.
Enberg added that Meta's AI tools are boosting engagement by refining user preferences and improving ad effectiveness, especially on Reels. However, she highlighted the need for Meta to manage rising AI expenses effectively, warning that any decline in its core ad business could impact investor confidence amid growing AI investments.
