MW Meta's growth strikes Wall Street as incomprehensibly strong, and the stock rockets

By Britney Nguyen

If the company's core business continues growing at the current rate and its Superintelligence efforts gain traction, 'there's no telling what the ceiling is for Meta,' Bernstein analysts say

Meta Platforms Inc.'s revenue trends look almost unbelievable to one analyst, and that could be part of the reason the Facebook parent company's stock was seeing a strong premarket gain on Thursday.

The company's (META) June-quarter revenues were up more than 22% from the previous year, and that performance may only get better in the September quarter. The top end of Meta's guidance for the third quarter translates to revenue growth of 24% year over year, which analysts at Bernstein said in a Wednesday note to clients "is frankly hard to comprehend and shouldn't be possible at this scale."

Meta attributed the momentum to better user engagement and improved advertising performance, thanks to the company's investments in artificial intelligence.

Shares of Meta are up 11% in Thursday's premarket action.

See more: Why is Meta's stock soaring after earnings? It's about far more than the numbers.

Even as Meta said it expects a slowdown in the fourth quarter, the analysts said "it's time to completely re-build the revenue-growth equation going forward" after the company's standout earnings.

"If you work hard and get a nice bonus, treat yourself and go buy whatever you want. Meta's buying time to win the AI era," the Bernstein team said, a likely reference to the company's lofty AI spending.

While Meta raised the bottom end of its forecasts for fiscal 2025 expenses and capital expenditures, the analysts said the focus is on Meta's expectations for total expenses to grow more than 20% in 2026, due to its AI-talent hiring spree and server depreciation. The company's capex is also projected to grow $30 billion next year to about $100 billion, which the analysts compared with spending by hyperscalers, or large-scale cloud providers such as Amazon.com Inc.'s $(AMZN.UK)$ Amazon Web Services and Microsoft Inc.'s $(MSFT.UK)$ Azure.

"But if core performance can continue at this level and there's visible progress towards Superintelligence with traction across any of Meta AI, Business messaging, or Wearables, there's no telling what the ceiling is for Meta," the Bernstein analysts said.

Meta's June-quarter results show that Chief Executive Mark Zuckerberg's "bold, aggressive bets" on AI are paying off, MoffettNathanson Research analysts said in a note to clients on Thursday. The analysts said AI-driven monetization and engagement growth "supports a thesis that Meta's advertising revenues will grow faster and longer than we and consensus expected."

In the MoffettNathanson team's view, Meta stands "apart as an early beneficiary of the AI-spending boom."

The analysts revised their revenue-growth estimates for 2025 to 20% and said that with "no change to Meta's 2025 cost outlook," fears of material margin contraction are "no longer an issue" for this year. However, those concerns "could come into play in 2026" as the company accelerates its spending.

MoffettNathanson said it appears for now that Meta's "early capex bet on GPUs have paid massive dividends," and that of the five AI opportunities the company has, the first two - advertising performance and user experience - are within reach.

"With that said, the next three - business messaging, Meta AI and AI devices - will likely take much longer to show dividends and could end up being more dilutive in the medium-term than the first two opportunities," the analysts added.

The MoffettNathanson team said that while they have doubts about Meta's ambitions to build devices that eventually replace smartphones, the company's "vision is pretty clear and revolutionary."

"Thus, the current gatekeepers - namely Apple and Alphabet - will be pushed to the side as consumers embrace a non-phone future," the analysts said. "Given Meta's scale and reach in consumer internet, they certainly have the touchpoints and connectivity to try to usher in this brave new world."

-Britney Nguyen

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July 31, 2025 09:26 ET (13:26 GMT)

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