Meta Q3 revenue expected to rise 18%; ad sales, AI investments in focus

Meta Platforms (NASDAQ:META) is expected to post an 18% rise in quarterly revenue on Wednesday, with investors focusing on the social media giant’s advertising sales and updates on generative AI investments.

Wall Street expects the Menlo Park, California-based company to post EPS $5.28 on revenue of $40.31 billion.

The Facebook parent projected that its expenses will stay higher as it continues to invest in generative AI, to compete with tech giants including Google and Microsoft.

Meta, during its second quarter results, said it is continuing to see healthy global advertising demand, driven by the AI investments it has made over time to boost targeting, ranking and delivery systems for digital ads on its platforms.

Evercore analyst Mark Mahaney forecast ad revenue to rise ~18% y/y to $39.8 billion for the third quarter.

“We expect Meta to report solid Q3 results as the company continues to benefit from generative AI product leadership, momentum with social commerce products, and improvements to its ad ranking infrastructure,” said Canaccord Genuity analyst Maria Ripps and forecast Q4 revenue of about $46 billion and operating income of $19.1 billion.

Analysts at D.A. Davidson praised Meta’s choice to open source AI compute elements, like Llama, PyTorch, and FAISS, which has positioned the company to be the open-source leader in AI foundational model compute.

According to a report in October, Meta is also developing its own search engine to reduce reliance on competitors, such as Google Search and Microsoft’s Bing.

Investors will be listening closely for any commentary on Meta AI product roadmap and investment opportunities. The company’s expenses are also something that will be another key focus, given current worries about rising costs.

Over the last three months, EPS estimates have seen 23 upward revisions, compared to three downward revisions, while revenue estimates have been revised upward 37 times versus one downward moves.

Seeking Alpha analysts and Wall Street are bullish and rated the stock a Buy and above. However, Seeking Alpha’s Quant ratings consider it a Hold, most concerned on the valuation factor.

The stock gained over 63% so far this year, outperforming the 22% rise in the broader S&P500 Index.