FACEBOOK PARENT META POSTS STRONGER-THAN-EXPECTED Q2 RESULTS, SENDING SHARES HIGHER AFTER HOURS

Investments in artificial intelligence will account for a significant increase in Facebook parent company Meta’s expenses in the coming year, but stronger-than-expected revenue from its advertising business was enough to reassure investors that its business is on the right track.

Meta Platforms Inc. reported stronger-than-expected results for the second quarter on Wednesday, sending shares sharply higher in after-hours trading. While it didn’t say how much it expects to spend on AI next year, the company made it clear it would be significant.

The prospect of soaring expenses can often spook investors, but analysts said Meta’s latest results show it can afford it, at least for now.

“The market’s positive response to Meta’s earnings report is a bellwether for AI stocks. If a company can show strong results from its core business, its investments in AI will be seen more positively. If the core business is showing any sign of weakness — as we saw last week with Alphabet’s YouTube — then the stock may seem more risky,” said Debra Aho Williamson founder and chief analyst at Sonata Insights.

She added that Meta stands out from other tech companies with AI ambitions because it already brings in a “massive amount” of advertising revenue — rather than trying to build a new business from scratch.