Meta Reports Outstanding Earnings. The Stock Is Up.

Meta Platforms has been investing huge amounts in artificial intelligence. (Justin Sullivan/Getty Images)

Meta Platforms blew out second-quarter earnings expectations Wednesday afternoon. Its shares were up in after-hours trading.

This is breaking news. Read a preview of Meta’s earnings below and check back for more analysis soon.

When Meta Platforms reports second-quarter earnings on Wednesday afternoon, Wall Street analysts will be expecting more of the strength the company has shown since its bleak 2022. Expectations are high, but questions still surround Meta’s increasing spending on artificial-intelligence data centers and researchers, and whether reduced budgets from Chinese advertisers will weigh on results.

On average, analysts are projecting earnings-per-share of $5.88 in the second quarter, compared to $5.16 last year, on sales of $44.8 billion, up 15% from last year.

Relative to the rest of Big Tech, Meta’s financials are simple, with ad sales from its apps such as Facebook and Instagram accounting for 98% of revenue in 2024. Analysts closely watch growth in users, ad prices, and the number of ads Meta served up in a quarter, which together drive revenue and earnings growth. Meta is also rapidly advancing its ad technology with AI.

Investors will also be watching the expense growth fueled by Meta’s substantial investments in AI. CEO Mark Zuckerberg is convinced that the future of the company could hinge on its success in reaching the ultimate AI goal of creating ”superintelligence,” a machine that can do any intellectual job at least as well as the smartest human. Meta is going to spend around $55 billion on new AI data centers in the last nine months of 2025, and its depreciation expenses will continue to creep up.

Meta has also been on an AI hiring spree, poaching very expensive researchers from Alphabet , OpenAI, and others. Analysts could have questions on the earnings call about the trajectory of Meta’s research-and-development spending.

During the first-quarter earnings call, Zuckerberg began his scripted presentation by laying out where the return on all this investment will come from.

For the second quarter, Meta released a Wednesday letter from Zuckerberg outlining a utopian vision of personal empowerment from AI. He sought to distinguish his company’s push from “others in the industry who believe superintelligence should be directed centrally towards automating all valuable work, and then humanity will live on a dole of its output.”

“Meta believes strongly in building personal superintelligence that empowers everyone,” he continued. “We have the resources and the expertise to build the massive infrastructure required, and the capability and will to deliver new technology to billions of people across our products.”

A downside risk for Meta’s second quarter is its exposure to China. Meta’s apps do not operate in China, but Chinese advertisers such as ultra-low-cost retailers Temu (owned by PDD Holdings ) and Shein accounted for 11% of Meta’s revenue in 2024. These two companies have been some of the biggest losers in the trade war.

Temu and Shein relied on the U.S. import “de minimus” exemption that allowed small-value packages to clear customs without tariffs, and that has been eliminated. These retailers compete largely on price, and that advantage has been muted.

According to analytics provider Sensor Tower, U.S. Temu downloads were down 77% in the past three months versus the same period last year, and Shein’s downloads were down 51%.

“Temu and Shein’s precipitous fall in app usage may be tied to each company’s advertising spend, as US ad spend fell by 87% and 69% YoY in 2Q25, respectively,” said SensorTower in its report on the shift. In the second quarter of 2024, Shein and Temu ranked as the tenth and eleventh biggest digital advertisers in the U.S.; in 2025 they were out of the top 60.

Temu and Shein were big ad buyers on Meta’s apps, also pushing up ad prices, and their troubles, along with those of other Chinese advertisers, might come to drag on Meta’s results. But this deficit could be offset by increased ad spending from low-cost retailers outside China.

Write to Adam Levine at adam.levine@barrons.com