Meta Earnings Preview: Can Q2 Results Justify the 47% Quarterly Surge?

Meta reports Q2 earnings after market close on July 30, and after a blowout Q1 that delivered a 41% operating margin, the bar is high. Investors will be scrutinising whether Meta’s AI bets and rising capex can continue to justify its near-record valuation.

Meta Earnings Review and Preview

Q1 FY25 Results Recap:

Q2 FY25 Forecast:

Consensus expects EPS of $5.83—up from $5.16 a year ago—and revenue between $42.5B and $45.5B. Operating margins are forecast to stay above 40%, even with surging AI infrastructure spend. While Meta slightly lowered its full-year expense guidance to $113–118B, capex has been lifted to $64–72B, reflecting the ongoing ramp-up in AI investment.

Based on Meta CFO’s guidance,

• Full year 2025 total expenses to be in the range of $113-118 billion, lowered from our prior outlook of $114-119 billion.
• Full year 2025 capital expenditures, including principal payments on finance leases, will be in the range of $64-72 billion

Key Earnings Watch Points

1. Family of Apps: Still the Profit Engine

Meta’s core apps—Facebook, Instagram, WhatsApp—continue to deliver. In Q1, the unit generated $41.9B in revenue and nearly $22B in operating profit. Daily active people hit 3.43 billion, up 6% YoY. Ad impressions rose 9%, and the average price per ad climbed 10%—a sign of solid advertiser demand and improved targeting.

AI is already embedded in Meta’s ad stack, and the focus will be on whether this is starting to unlock incremental revenue.

2. Reality Labs: Still Burning Cash

The metaverse bet remains costly. Reality Labs posted a $4.2B loss in Q1, with no revenue traction in sight. Markets want signs of spending discipline or hints of monetisation beyond consumer VR—especially around enterprise or AI-enhanced productivity tools. So far, there’s little to show.

3. Capex and Cash Flow: The AI Tax

Capex guidance was raised again, now up to $72B for the full year. Most of this is tied to AI infrastructure—Llama 3 models, AI agents in WhatsApp and Messenger, and data centre upgrades. But free cash flow dropped to $10.33B last quarter, the lowest in a year.

The key question now: is the near-term payoff visible, or is Meta spending ahead of the curve with limited return?

META Technical Setup

Meta shares have surged 48% year-to-date,one of the best performer out of Mag 7, highlighting the returned hype and sky-high expectations among investors. The price is recently trading around $714.80, just below major resistance at $722–$745. The price action remains confined in a steep rising channel, but momentum is starting to flatten.

A clean breakout above recent peak over $745 could open the door to $785+, while failure to sustain above $722.55 may trigger a retracement toward $682 or the 100-day EMA at $661.

Post-earnings, Meta has a strong track record: it has beaten EPS in each of the past five quarters, with positive share price reactions in three of those instances.

Summary

Meta enters Q2 earnings season with sky-high expectations after a 22% YTD rally and consistent profit beats. But with rising AI-driven capex and ongoing Reality Labs losses, investors want more than strong results—they want proof of long-term monetisation.

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