Why Meta Platforms Stock Is Skyrocketing Today

Key Points

• Meta Platforms beat second-quarter estimates handily, with EPS surging 38% year over year to $7.14.

• Meta continues to add to its audience, with daily active users growing 6% year over year.

• The company will accelerate AI investment into the next year.

• 10 stocks we like better than Meta Platforms ›

Shares of Meta Platforms (NASDAQ: META) are flying higher on Thursday, up 12.2% as of 2:53 p.m. ET. Today's jump comes as the S&P 500 was flat and the Nasdaq Composite gained 0.3%.

The tech giant reported earnings after markets closed on Wednesday, including a blowout quarter that beat the already high expectations of Wall Street.

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Meta's ad business is stronger than ever

The second-quarter earnings report showed that the company's huge base of daily active users (DAUs) is still growing, up 6% year over year (YOY). This, along with efficiency gains that the company attributed to AI, drove huge growth in earnings and sales.

Earnings per share (EPS) jumped 38% YOY to $7.14, well above the analyst consensus estimate of $5.88 for the quarter. Its top-line revenue reached $47.5 billion, a 22% jump YOY, handily beating Wall Street's $44.8 billion target.

Image source: Getty Images.

CEO Mark Zuckerberg explained this success by saying, "The strong performance this quarter is largely thanks to AI unlocking greater efficiency and gains across our ad system."

That's a good thing for investors to hear, considering Meta spent $31 billion on AI in the first half of this year alone, and it doesn't plan to stop anytime soon. Chief financial officer Susan Li told investors that Meta expects to ramp up its investments significantly in 2026.

Meta looks healthy

Meta appears to be firing on all cylinders and reaping the benefits of AI while investing heavily in its future. Its enormous cash flows will allow it to do so more or less indefinitely, or at least until shareholders' appetite wanes.

If these sorts of efficiency gains continue, however, I don't see that happening. Even after today's spike, Meta is a buy.

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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool has a disclosure policy.