Facebook parent company Meta (META) will report fiscal third-quarter earnings after the closing bell on Wednesday. The social media giant has quickly become an AI powerhouse in its own right alongside the likes of Microsoft (MSFT), Google (GOOG, Google) and Amazon (AMZN) and investors are on board for the ride.

The commodity stock is up 66% since the beginning of the year and 26% in the last three months. By comparison, Amazon shares are up 25% in the last three months and Google shares are up 21%. Meanwhile, Microsoft’s stock price increased by 15% during the same period.

Wall Street expects Meta to report earnings per share (EPS) of $5.25 on revenue of $40.2 billion in the third quarter, according to analyst estimates compiled by Bloomberg. The company generated $34.1 billion in revenue in the same quarter last year and earned $4.50 per share.

Ad revenue expected to be $39.7 billion versus $33.6 billion In the third quarter of 2023. Meta’s Reality Labs segment, which includes sales of the Quest line of augmented reality headsets, is expected to grow from $210 million to $312 million.

Meta’s AI strategy includes rolling out the Llama family of models across consumer offerings and advertiser products. It also offers the platform as open source software. For this purpose, Meta obtained from Accenture (ACN) and DoorDash (DASH) to Goldman Sachs (GS) uses Llama to develop their own AI software.

Meta’s earnings are as follows: The Information reports It was stated that the company is working on its own search function for the Meta AI service, which will allow users to ask questions about current events and get answers. The goal is to ensure that Meta no longer has to rely on Google’s or Microsoft’s search engines to answer specific user queries.

The company is also coming off a successful Meta Connect conference where it unveiled a working prototype of its Orion augmented reality glasses. The device, which is still in the development phase, is intended to serve as glasses that allow you to talk to other users through holograms projected into the real world.

CEO Mark Zuckerberg and the company also talked about the success of Meta’s increasingly popular Ray-Ban Meta smart glasses and launched the Quest 3S entry-level augmented reality headset.

But all this AI and hardware development costs a serious amount of money. Meta is expected to report capital expenditures of $11 billion in the third quarter, a dramatic increase from the $6.76 billion the company spent in last year’s third quarter. And spending isn’t expected to stop anytime soon. Wall Street expects capital spending to exceed $12 billion in the fourth quarter.

Beyond spending concerns, Meta faces a number of high-profile legal challenges, including an FTC antitrust lawsuit alleging the company operates as an illegal monopoly, as well as lawsuits claiming Meta is harmful to young people’s mental health.

Email Daniel Howley at [email protected]. Follow him on Twitter: @DanielHowley.

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