Meta Platforms surprised Wall Street with a stronger-than-expected revenue outlook for the third quarter, driven by gains in its AI-enhanced advertising systems.
The company’s announcement on Wednesday prompted an 11% surge in its share price during after-hours trading.
Investors, previously uneasy about Meta’s rapid-fire spending on artificial intelligence initiatives, found renewed confidence as the company signaled that those investments were paying off—especially in its core businesses, Facebook and Instagram.
Meta increased its expected capital spending for the year, adjusting the lower end of its range up by $2 billion to between $66 billion and $72 billion.
CEO Mark Zuckerberg emphasized on a call with analysts that AI advancements are “making big leaps possible” in the advertising space.
Meta also acknowledged that the costs tied to developing its AI capabilities—such as building out advanced data centers and offering competitive compensation to researchers—would drive up its expense growth in 2026 at a faster pace than in 2025. Spending is anticipated to rise again next year.
“I think there are all these questions that people have about what are going to be the timelines to get to really strong AI or superintelligence … we’ve observed the more aggressive assumptions, or the fastest assumptions, have been the ones that have most accurately predicted what would happen.
I think that that just continued to happen over the course of this year too,” Zuckerberg said during the analyst call.
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AI Arms Race Across Tech Titans
Meta’s performance, coupled with Microsoft’s after-market gains, contributed to an impressive $500 billion boost in market value on Wednesday. Microsoft projected that its first-quarter capital expenditure would top $30 billion, far above analysts’ predictions.
This came shortly after Alphabet, Google’s parent company, upped its own annual spending plans to $85 billion.
Meta projects its third-quarter revenue to range between $47.5 billion and $50.5 billion—well ahead of the $46.15 billion analysts anticipated. While Meta expects slightly slower year-over-year revenue growth in the final quarter, AI’s contribution continues to impress.
“AI-driven investments into Meta’s advertising business continue to pay off,” said Minda Smiley, senior analyst at Emarketer, although she noted investor concern around Meta’s aggressive AI-related spending.
She also flagged ongoing legal pressure from U.S. antitrust authorities over Meta’s control of Instagram and WhatsApp.
Betting Big on AI Innovation and Talent
Zuckerberg remains undeterred. “We’re just going to push very aggressively on all of that,” he said, referring to AI development. Recent moves include a $14.3 billion investment in Scale AI and a spree of high-value offers to lure top researchers from competitors.
Meta’s latest innovations include AI tools that convert static images into video ads. For the quarter ending June 30, Meta reported $47.52 billion in revenue and $7.14 earnings per share—both beating expectations.
Instagram, through its Reels format, is on track to generate over half of Meta’s U.S. ad revenue this year.
Read next: Meta Leaders Reach Settlement in Shareholder Privacy Case
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