Oct 20 : Meta's massive artificial intelligence outlays and adoption of its Muse personal assistant will be in focus when it reports third-quarter results on Wednesday, as the social media firm seeks to show that its AI investments can sustain growth.
The company has rolled out several AI products and services targeting businesses as CEO Mark Zuckerberg looks to create a new revenue stream beyond advertising to compete better in the AI race with OpenAI and Anthropic.
• Positive reception for Meta's Muse assistant, which offers subscriptions, and its latest AI models have boosted investor confidence in the company's AI strategy, as Meta commits hundreds of billions of dollars to expanding its AI infrastructure
• "Recent AI launches have strengthened confidence in the company's AI execution," BofA Global Research analysts said, adding that its survey also suggests healthy ad demand in the quarter
• Analysts estimate Meta's capital expenditure more than doubled to $41.68 billion in the September quarter, according to Visible Alpha data
• The rising spending had squeezed its free cash flow in the second quarter and analysts expect it to report a cash burn of $8.52 billion in the third quarter
• Morgan Stanley analysts raised their earnings estimates for 2027 and 2028 for Meta despite higher spending, citing stronger ad growth and the potential for new AI products to generate additional revenue
• Wall Street expects Meta to report a decline of about 17 per cent in net income to $15.44 billion, according to data compiled by LSEG
• Meta is set to report revenue growth of 23.8 per cent to $63.42 billion, slowing from about 28 per cent in the previous quarter amid intense competition from Google and TikTok
• Shares of the company have gained about 7 per cent this year, underperforming a roughly 12 per cent rise in the benchmark S&P 500