Meta signals $66B–$72B 2025 capex outlook as superintelligence and AI investments accelerate

Earnings Call Insights: Meta Platforms (META) Q2 2025

Management View

Mark Elliot Zuckerberg opened with “We had another strong quarter with more than 3.4 billion people using at least one of our apps each day and strong engagement across the board.” He emphasized Meta’s commitment to AI, stating, “Over the last few months, we’ve begun to see glimpses of our AI systems improving themselves…developing superintelligence, which we define as AI that surpasses human intelligence in every way, we think, is now in sight.”
Zuckerberg announced the formation of Meta Superintelligence Labs, bringing together foundation, product, and FAIR teams with a new lab focused on next-generation AI models. Leadership includes Alexandr Wang, Nat Friedman, and Shengjia Zhao. Zuckerberg explained, “Our Prometheus cluster is coming online next year, and we think it’s going to be the world’s first gigawatt-plus cluster. We’re also building out Hyperion, which will be able to scale up to 5 gigawatts over several years.”
Product updates included progress in AI-driven ad efficiency, “roughly 5% more ad conversions on Instagram and 3% on Facebook,” and a “meaningful percent of our ad revenue now coming from campaigns using one of our generative AI features.”
The company observed increased engagement, with “a 5% increase in time spent on Facebook and 6% on Instagram, just this quarter,” and noted “more than 1 billion monthly actives” for Meta AI. Meta AI glasses and Quest ecosystem also saw momentum, with the new Oakley Meta HSTN and Meta Quest 3S Xbox Edition launches.
Susan J. S. Li stated, “Q2 total revenue was $47.5 billion, up 22% on both a reported and constant currency basis,” and “Net income was $18.3 billion or $7.14 per share.” Li highlighted “Capital expenditures, including principal payments on finance leases were $17 billion,” and the end of Q2 “with $47.1 billion in cash and marketable securities and $28.8 billion in debt.”

Outlook

Meta expects Q3 2025 total revenue “to be in the range of $47.5 billion to $50.5 billion.”
The full year 2025 total expenses outlook was updated “to be in the range of $114 billion to $118 billion, narrowed from our prior outlook of $113 billion to $118 billion,” with Li adding, “we expect 2026 year-over-year expense growth rate that is above the 2025 expense growth rate.”
2025 capital expenditures, including principal payments on finance leases, “to be in the range of $66 billion to $72 billion, narrowed from our prior outlook of $64 billion to $72 billion.” Li stated, “We currently expect another year of similarly significant CapEx dollar growth in 2026.”
The company anticipates “a reduction in our U.S. federal cash tax for the remainder of the current year and future years,” though the 2025 tax rate is expected to be higher than Q2’s.

Financial Results

Family of Apps revenue reached $47.1 billion, with ad revenue at $46.6 billion. Family of Apps operating income stood at $25 billion, a 53% margin.
Reality Labs revenue was $370 million, up 5% year-over-year, with an operating loss of $4.5 billion.
The company repurchased $9.8 billion in stock and paid $1.3 billion in dividends. Nonmarketable equity investments totaled $15.1 billion, including a minority stake in Scale AI.
Free cash flow was $8.5 billion.

Q&A

Eric James Sheridan, Goldman Sachs: Asked about AI strategy shifts and their impact on talent and compute investment. Mark Elliot Zuckerberg replied, “We’re just going to push very aggressively on all of that…There’s sort of a bet in the trajectory that we’re seeing and those are the signals that we’re seeing.”
Brian Thomas Nowak, Morgan Stanley: Questioned technological constraints for superintelligence and engagement drivers. Zuckerberg cited “self-improvement is a very important area of research” and the need for “small talent-dense teams to be the optimal configuration for driving frontier research.”
Douglas Till Anmuth, JPMorgan: Inquired about open source AI and CapEx financing. Zuckerberg said, “I would expect that we will continue to produce and share leading open source models. I also think…as you approach real superintelligence, I think there is a whole different set of safety concerns.” Susan J. S. Li noted, “We’re also exploring ways to work with financial partners to co-develop data centers.”
Justin Post, Bank of America: Asked about infrastructure use and ROI. Li explained, “Right now, we are focused on ensuring that we have enough capacity for our internal use cases…On the genAI side, we are clearly much, much earlier on the return curve and we don’t expect that the genAI work is going to be a meaningful driver of revenue this year or next year.”
Mark Elliott Shmulik, Bernstein: Sought KPIs for superintelligence progress. Zuckerberg identified “the quality of the people on the teams, the quality of the models that we’re producing, the rate of improvement of our other AI systems across the company.”

Sentiment Analysis

Analysts pressed for specifics on AI timelines, CapEx ROI, and open source risks, indicating a slightly negative tone as they sought reassurance on expense growth and monetization.
Management maintained a confident and optimistic tone in prepared remarks but showed caution and a more measured stance when addressing long-term financial impacts and AI uncertainties in the Q&A. Zuckerberg used phrases like “we believe” and emphasized a “bet in the trajectory that we’re seeing.”
Compared to the previous quarter, analyst skepticism increased regarding CapEx and ROI, while management continued to project confidence but acknowledged dynamic planning needs.

Quarter-over-Quarter Comparison

Revenue growth accelerated from 16% in Q1 to 22% in Q2, with stronger ad revenue and engagement metrics.
CapEx outlook was narrowed upward for 2025, and management signaled even higher infrastructure and compensation costs ahead in 2026, compared to a more cautious tone in Q1.
Guidance language for European regulatory risks became more urgent, with explicit warnings of “a significant negative impact on our European revenue as early as later this quarter.”
Analysts’ focus shifted further toward the sustainability of AI investments, infrastructure financing, and regulatory headwinds.

Risks and Concerns

Management warned, “We continue to monitor an active regulatory landscape, including the increasing legal and regulatory headwinds in the EU that could significantly impact our business and our financial results.”
The European Commission may seek “further modifications” to Meta’s Less Personalized Ads offering, which “could have a significant negative impact on our European revenue as early as later this quarter.”
Expense growth pressures are expected from AI infrastructure and talent, with Li stating “the largest single driver of growth will be infrastructure costs…the second largest driver of growth to be employee compensation.”

Final Takeaway

Meta Platforms advanced its AI and superintelligence strategy in Q2 2025, delivering strong revenue growth and engagement while highlighting its commitment to expanding compute infrastructure and technical talent. The company outlined significant upcoming capital expenditure increases and warned of potential regulatory impacts in Europe, with management reinforcing that these investments are critical for maintaining long-term leadership in AI and product innovation.

Read the full Earnings Call Transcript