What Drove Meta’s Blowout Q2 2025 Results? AI.
Mark Zuckerberg just dropped some eye-opening details about how AI is impacting Meta’s ad revenue.
During Meta’s July 30 earnings conference call, Zuckerberg directly tied the company's extraordinary 22% YoY revenue growth to its use of AI to deliver efficiencies in the ad system.
"On advertising, the strong performance this quarter is largely thanks to AI unlocking greater efficiency and gains across our ads system."—Mark Zuckerberg, Meta CEO
Advertising made up a whopping 97.99% of Meta’s Q2 2025 revenue. Take that in for a moment. While Alphabet or Amazon — two other tech companies with large ad businesses — have other business lines like cloud sales (Alphabet) and retail + cloud (Amazon) to help boost revenue, Meta has all of its eggs in one basket. It’s an extraordinary risky strategy, but advertising has been the backbone of Meta since its earliest days as Facebook, and it is clearly doing something right that’s resonating with advertisers.
Here's what else Zuck and CFO Susan Li said about the impact of AI on its ad business:
Zuck: "A meaningful percent of our ad revenue [is] now coming from campaigns using one of our Generative AI features."
Li: "Nearly 2 million advertisers are now using our video generation features - Image Animation and Video Expansion."
Zuck: "Our new AI-powered recommendation model [has] driven roughly 5% more ad conversions on Instagram and 3% on Facebook."
AI is also boosting time spent on Facebook and Instagram by showing users content that's more interesting and useful.
Zuck: "Advancements in our recommendation systems have improved quality so much that it has led to a 5% increase in time spent on Facebook and 6% on Instagram just this quarter." That translates to more chances to show advertising.
I shared my POV on Meta's results with Investor's Business Daily, Reuters and Agence France-Presse. Thank you to Ryan Deffenbaugh, Echo Wang and the reporters at AFP for including my perspective!
Read Sonata Insights’ viewpoints here:
Big Tech may be breaking the bank for AI, but investors love it
