Meta 2Q25 Earnings Preview

TradingKey -Meta will release its earnings for the second quarter of the fiscal 2025 on July 30th after the market closes:

• 2Q25 Earnings per share: $5.87 estimate vs. 2Q24 actual of $5.16 (+14% y/y)
• 2Q25 Revenue: $44.78bn estimate vs. 2Q24 actual of $39.07bn (+15% y/y)

Advertising business:

Before we get into AI, we should talk about Meta’s cash cow – the advertising business. Meta is the second largest advertising platform, just after Alphabet. The parent of Google already has reported revenue growth above expectations, making people feel upbeat about Meta as well. This will largely depend on the number of active users across all platforms for Meta – a number already quite mature and growing at just low-single digit. The main growth driver for the ad business will be how well the company is implementing its AI tools into its advertising products. Another area that we would look into is how and when the growing platforms like WhatsApp and Threads are going to monetize.

AI efforts:

As one of the major scalers, AI is already a centerpiece of the company’s future. First thing, people will ask about Meta is the capital spending. We already saw Alphabet revising upwards its estimates for capex for the year, and we don’t expect things to be different here. For reference, the current guidance stands at $64-72 billion, primarily going towards AI infrastructure.

Another aspect that Meta has been quite notable recently is the massive hiring of top-notch AI talent. During the earnings call, Zuckerberg will probably disclose more on where the company is currently standing with the hiring process. Cannot deny that, as of now, there is no consensus agreement on whether this hiring spree will be able deliver the desired result.

Finally, the company’s LLM model will also be in the spotlight, as investors are eager to see more concrete steps on cutting the gap between Meta’s Llama and the leaders – OpenAI and Grok.

Conclusion

Meta currently trades at just 27x PE as its current state of ad business is solid. However, investors want to see whether the large spending on both infrastructure and talent actually moves the needle for the AI initiatives.