Shares of Meta Platforms Inc. (META) soared more than 12% to record highs on Thursday after the company reported blockbuster second-quarter earnings and strong guidance for the third quarter.
The rally lifted exchange-traded funds with heavy exposure to the stock, including the Communication Services Select Sector SPDR Fund (XLC), where Meta makes up nearly 18% of the portfolio, and the Invesco QQQ Trust (QQQ), where the stock has a 3.5% weighting.
Leveraged funds tied to the company also surged. The GraniteShares 2x Long META Daily ETF (FBL) jumped 24% on the day.
Meta reported earnings per share of $7.14, far exceeding analyst estimates of $5.89. Revenue hit $47.5 billion, up 22% year over year and 6% above expectations. The company guided for third-quarter revenue of $49 billion at the midpoint, significantly ahead of the consensus estimate of $46.2 billion.
CEO Mark Zuckerberg credited artificial intelligence for driving growth in Meta’s core business.
“AI is significantly improving our ability to show people content that they’re going to find interesting and useful,” Zuckerberg said on the earnings call. “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.”
Zuckerberg added that AI is also making Meta’s platforms more effective for advertisers while enabling entirely new products, such as AI-powered messaging tools, assistants, and hardware devices.
To support these ambitions, Meta has been hiring aggressively, reportedly luring top researchers from rivals like OpenAI and Alphabet Inc. (GOOGL) with lucrative pay packages. These new hires are joining the company’s Meta Superintelligence Lab, which is focused on developing next-generation AI models and products.
The company’s Llama family of open-source models has lagged behind rivals like OpenAI’s GPT and Google’s Gemini, but Zuckerberg said Meta is investing heavily to catch up. Capital expenditures are expected to reach $69 billion this year, with the potential to hit $100 billion in 2026—most of it aimed at scaling up AI infrastructure.
While investors have previously balked at Meta’s big spending—particularly during the company’s pivot to the metaverse in 2021—this time the payoff appears to be coming more quickly. That has helped ease concerns and renew optimism in the company’s long-term strategy.
Meta hasn’t abandoned its metaverse ambitions, but its vision is evolving. Products like the Ray-Ban Meta smart glasses have seen strong demand, and the company is developing more advanced augmented-reality devices that blend its metaverse and AI efforts.