3 Things to Watch for Meta’s Q2 2025 Earnings
How will AI impact Meta's Q2 2025 earnings report tomorrow? Here are three words to watch from an analyst (me!) who’s been researching Meta’s business since 2006.
1. CapEx
Meta’s capital expenditures are ballooning, and its most recent projection is for $64 to $72 billion in spending in 2025, driven by AI data center and “superintelligence” bets.
Meta needs to start showing disciplined ROI from these massive AI investments, otherwise, continued boosts in CapEx estimates will destroy investor patience. If the company can provide more evidence that AI-led investments are moving beyond R&D into revenue-driving products, and that the massive salary packages offered to AI researchers are worth it, then investors may be willing to give Meta more grace.
2. Advertising
The consensus revenue estimate for Q2 is ~$44.6 billion (halfway between Meta’s guid
ance of $42.5 billion and $45.5 billion), and I’m expecting ad demand to remain strong despite some macro uncertainty. Meta has a track record of outperforming consensus estimates (and sometimes the upper end of guidance), and this may well have happened again in Q2.
In the earnings call, Meta will continue to emphasize how AI-powered tools like Advantage+ help boost ad performance. Executives will likely also talk up Meta’s plan to use AI to automate the creation and targeting of ads. Many big advertisers and agencies aren’t happy about this plan, since it puts control in Meta’s hands. But Meta has a history of enacting big changes like this despite advertiser objections (the drastic reduction in brand pages’ organic reach several years ago comes to mind). And the end result is that advertisers usually play along.
Another AI advertising topic that will likely come up is when or if Meta will start monetizing its consumer-facing Meta AI products. I don’t expect that to happen this year, especially now that Meta has started including ads in Threads and WhatsApp as of Q2 2025.
Regional ad performance, especially in Asia-Pacific, will be a focal point after Q1 underperformance. Spending by China-based advertisers will be a topic of discussion.
3. Reality Labs (ok that's 2 words)
Reality Labs continues to burn cash, with little visibility into return on investment even with the pivot away from the metaverse and toward AI.
Investors want assurance that the long‑term Reality Labs strategy is still navigable and will align more closely with the financial discipline Meta has emphasized in other areas of the business. If Meta were to discuss cost management or narrowed ambitions, it could ease investor concerns. The Meta Ray-Ban glasses remain Meta’s most compelling product offering, but even with expensive marketing support (i.e. TV ads featuring well-known actors), the glasses are still a niche product.
