SAN FRANCISCO, July 30 — Meta Platforms reported lower quarterly profits despite posting strong revenue growth, as the company continued pouring billions into artificial intelligence (AI) infrastructure while absorbing legal and restructuring costs.
The Facebook and Instagram parent company recorded a net profit of US$15.8 billion, down 14 per cent from the same period last year. However, revenue climbed 28 per cent to US$60.8 billion, exceeding analysts' expectations and highlighting the continued strength of its digital advertising business.
Despite the strong revenue performance, Meta’s shares fell as much as 12 per cent in after-hours trading as investors reacted to the company's rising AI-related spending.
Much of the decline in profit was attributed to one-off expenses, including US$2.4 billion in legal charges and US$1.2 billion in severance costs following layoffs carried out in May.
Meta is also facing increasing legal challenges worldwide, including a landmark California case where a jury ordered the company and Google to pay US$6 million to a woman who claimed the platforms contributed to her social media addiction during childhood.
The tech giant reaffirmed its aggressive investment strategy in AI, raising its projected capital expenditure for the year to between US$130 billion and US$145 billion, nearly double last year's spending.
Chief Executive Officer Mark Zuckerberg said AI is already strengthening Meta’s core business while opening new opportunities for future products and enterprise services.
The company also revealed plans to expand into cloud computing by offering excess AI computing power to external customers, creating a potential new source of revenue beyond advertising.
Meanwhile, Meta’s Reality Labs division, which oversees virtual reality and wearable technology, continued to post heavy losses of US$4.6 billion during the quarter. The company is increasingly shifting its focus from virtual reality headsets to AI-powered smart glasses as part of its long-term hardware strategy.
Meta’s free cash flow also declined sharply to US$784 million, reflecting the heavy financial commitment required to remain competitive in the rapidly expanding AI industry.
The earnings report comes as major technology companies continue racing to invest in AI infrastructure, with investors closely watching whether the enormous spending will translate into sustainable long-term growth.
Source: AFP
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