Meta's earnings report is pleasing, with revenue exceeding expectations.

Meta (formerly Facebook) announced a robust earnings report on Wednesday, following Google's (Alphabet (NASDAQ: GOOGL)) impressive earnings release, further uplifting the market. This also indicates that despite macroeconomic concerns, consumers and advertisers continue to increase their ad spending.

However, Meta also forecasted an increase in expenditures for 2023 and 2024, including legal fees and increased infrastructure spending, widely regarded as key to the tech industry's competition in artificial intelligence.

In after-hours trading, Meta's stock price rose by 7.5%.

Meta CEO Mark Zuckerberg said, "Our applications continue to attract a large number of users, and our product roadmap is very exciting, including Llama 2, Threads, Reels, upcoming new AI products, and the upcoming Quest 3 this fall."

Meta's revenue for the second quarter grew by 11% to $32 billion as of June 30, while the average analyst estimate was $31.12 billion.

Ad revenue increased by 12% this quarter, outpacing Google, whose ad revenue grew by 3%. According to Refinitiv data, earnings per share adjusted were $2.98, surpassing Wall Street's expectation of $2.91.

This social media giant is gradually recovering from its significant setbacks in 2022, benefiting from the hype surrounding emerging artificial intelligence technology and a tightening policy that saw the layoff of about 21,000 employees over the past year and a half.

Therefore, the company's stock price has more than doubled this year.

After months of restrained spending, advertisers are once again heavily investing in the digital advertising market, believing that the economy is less likely to face a major crisis despite high inflation.

Nevertheless, brands remain cautious and stick to tried-and-tested platforms, benefiting Meta and Alphabet but hitting smaller competitors like Snap (New York Stock Exchange: SNAP), which reported disappointing sales results on Tuesday.

Meta did not specify whether its revenue forecast includes any sales that the recently launched Threads app might generate, as the app has not yet accepted any advertisers.

In terms of losses and expenses, as Meta heavily invests in upgrading data centers and maintaining competitiveness in the emerging AI technology race, these revenue increases provide some relief. Meanwhile, the company continues to invest over $10 billion annually in long-term investments for "metaverse" hardware and software.

Meta has cut part of its 2023 capital expenditure forecast, partly because some AI-related costs are postponed to 2024 when capital expenses are expected to increase.

Zuckerberg told investors that executives are "vigorously debating" how much AI capacity to bring online to meet potential demand surges. He believes AI has three product categories: functionalities for advertisers, AI agents in conversations, and productivity tools within the company.

He said he expects Meta's recently launched Llama 2 model to generate some revenue, primarily open-source but requiring a license for use by companies with over 700 million users.

"We hope it remains open. However, if companies like Microsoft (NASDAQ: MSFT), Amazon (NASDAQ: AMZN), or Google are essentially reselling these services, we think we should also earn a portion of the revenue," Zuckerberg said.

Meta's Reality Labs division, responsible for developing metaverse-oriented technologies like augmented reality glasses, saw its sales decrease from $452 million in the same period last year to $276 million.

The division lost $3.7 billion in the second quarter, far exceeding the annual target of $5 billion widely reported to investors last fall.

Since 2021, the division has lost over $40 billion, with last year's loss alone reaching $13.7 billion.

Meta expects the operating losses of Reality Labs to "significantly increase" in 2024, as the company continues to invest in augmented and virtual reality, and "expand our ecosystem." Zuckerberg previously stated that Meta would "moderately" invest in this division after 2023.

He told investors that he understands many people are uneasy about such long-term investments.

The company expects its total expenses for 2023 to range between $88 billion and $91 billion, up from the previous forecast of $86 billion to $90 billion, due to "legal-related expenses."

Meta stated that the second quarter's expenses included $1.87 billion in legal fees, most of which were associated with a fine by the Irish Data Protection Commissioner in May for Meta's transfer of user information to the United States. The fine amounted to 1.2 billion euros ($1.3 billion). Higher infrastructure-related costs are expected in 2024, along with "increased wage expenses as our staff composition shifts towards more costly technical roles."