#earningsseason
META ahead of Q3: growth is solid, but is AI eating into profits?
In a nutshell: Q2 revenue rose 28% to $60.8 billion, but EPS fell 13% to $6.18, well below expectations. Full-year capital expenditure guidance is between $130 billion and $145 billion. (247wallst) (fxleaders)
My take: the ad engine is clearly working, and AI is one of the main reasons. But spending is high enough to weigh on margins and free cash flow for now. Both sides have valid arguments: bulls see long-term AI monetization; bears see returns that are still unproven.
What will determine the reaction:
Bull case: capital expenditures stay within the range, and Q3 guidance beats the consensus of around $63 billion
Bear case: capital expenditures exceed $145 billion or guidance is weaker
To me, this time, capital expenditure discipline matters more than the revenue figure.
If capital expenditures keep rising while revenue grows by around 28%, is this a buying opportunity or a warning sign?
$METAB
META ahead of Q3: growth is solid, but is AI eating into profits?
In a nutshell: Q2 revenue rose 28% to $60.8 billion, but EPS fell 13% to $6.18, well below expectations. Full-year capital expenditure guidance is between $130 billion and $145 billion. (247wallst) (fxleaders)
My take: the ad engine is clearly working, and AI is one of the main reasons. But spending is high enough to weigh on margins and free cash flow for now. Both sides have valid arguments: bulls see long-term AI monetization; bears see returns that are still unproven.
What will determine the reaction:
Bull case: capital expenditures stay within the range, and Q3 guidance beats the consensus of around $63 billion
Bear case: capital expenditures exceed $145 billion or guidance is weaker
To me, this time, capital expenditure discipline matters more than the revenue figure.
If capital expenditures keep rising while revenue grows by around 28%, is this a buying opportunity or a warning sign?
$METAB