Meta Platforms Inc. easily beat Wall Street’s expectations as it posted its second-quarter financial results today, and its shares gained more than 11% in extended trading.

The company reported earnings before certain costs such as stock compensation of $7.14 per share, while revenue for the period rose 22%, to $47.52 billion. Those numbers shattered expectations, with Wall Street looking for a mere $5.92 per share in earnings and $44.8 billion in sales.

That was primarily thanks to the strong performance of Meta’s advertising business, which generates virtually all of its revenue. Second-quarter ad sales came to $46.56 billion in the quarter, topping Wall Street’s projection of $43.97 billion. All told, Meta posted net income of $18.33 billion in the quarter, up from a profit of $13.46 billion in the year-ago period.

On a conference call with analysts, Meta Chief Executive Mark Zuckerberg (pictured) said the real reason for the company’s success is its artificial intelligence technology, which has helped to unlock “greater efficiency and gains across our ad system.”

The social media giant also offered a strong forecast for the current quarter, saying it expects third-quarter sales of between $47.5 billion and $50.5 billion, well ahead of Wall Street’s target of $46.14 billion. In addition, it said it’s going to increase its spending

There was encouraging growth in terms of daily active people, which measures the total user base across all of Meta’s applications, including Facebook, Instagram, WhatsApp and Threads. It ended the quarter with 3.48 billion daily active people, up from 3.43 billion three months ago and ahead of the Street’s forecast of 3.45 billion.

The only real disappointment was, again, Meta’s Reality Labs unit. It’s tasked with developing the virtual reality and augmented reality technologies that Zuckerberg has previously pinned so much hope on for the companies’ future growth. For now, it remains very much a money pit, registering an operating loss of $4.53 billion in the quarter, while generating just $370 million in revenue.

Meta said its total costs and expenses during the quarter came to $27.08 billion, up 12% from the same period one year earlier. The company also adjusted its forecast for capital expenditure in fiscal 2025, saying it now expects to spend between $66 billion and $72 billion this year, increasing the lower end of its previous estimate of $64 billion to $72 billion.

The main reason for the rising capex is compensation related to hiring, which is set to follow data center infrastructure spending as the “second-largest driver of growth.”

In recent weeks, the company has gone all-out in its efforts to hire some of the best AI talents in the business, primarily through a series of very expensive “acqui-hires.” It kicked things off in June when it invested $14.3 billion into the data labeling company Scale AI Inc. in a deal that saw the company’s CEO Alexandr Wang jump ship. Wang is now co-leading Meta’s new Superintelligence Labs as its Chief AI Officer, heading up its efforts to create “artificial general intelligence,” which is loosely defined as an AI system that surpasses the intellectual capabilities of humans.

Following Wang, Meta then swooped in to recruit the former GitHub CEO Nat Friedman, who played a key role in developing the popular coding bot GitHub CoPilot. Earlier this month, it further expanded its AI team, hiring Safe Superintelligence Inc. CEO Daniel Gross. According to Meta, both Friedman and Gross will join Wang in the new Superintelligence Labs unit.

It’s thought that Zuckerberg chose to embark on an AI hiring spree after the company’s most recent flagship large language model, Llama 4, received only a lukewarm response from developers. Prior to the earnings report, he published a letter outlining his vision of “personal superintelligence,”, saying that he believes the technology should be focused more on “personal empowerment” rather than increasing productivity and automation.

Zuckerberg expanded on this in response to a question from an analyst on the call, saying that superintelligence will empower people to be “more creative, develop culture and communities, connect with each other and lead more fulfilling lives.”

The CEO said he has already seen glimpses of how the company’s AI systems are improving themselves, and although the progress has been slow, it is “undeniable,” he stated. “Developing superintelligence, which we define as AI that surpasses human intelligence in every way we think, is now in sight.”

Holger Mueller of Constellation Research Inc. said investors probably aren’t too worried about the costs of Zuckerberg’s “Superintelligence” ambitions, even if they are running into billions, because its current rate of growth means it has plenty of cash on hand to fund such initiatives.

“While the previous focus on the metaverse was a defensive move, motivated by the need to ensure its ads appear where everyone lives, Meta’s goals in AI appear more offensive,” the analyst said. “But with ad impressions and average price per ad both increasing increasing, it looks like AI is certainly not hurting Meta’s bottom line.”

When asked about the company’s spending on data center infrastructure, Meta Chief Financial Officer Susan Li said she is exploring ways that it can work with financial partners to codevelop new facilities. Her comments come after a report last month that Meta is seeking to raise $29 billion in funding to build out its data centers.

“We don’t have any finalized transactions to announce, but we generally believe that there will be models here that will attract significant external financing to support large-scale data center projects that are developed using our ability to build world-class infrastructure,” Li said.

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