Sifting through the financial wreckage of last week's pullback illuminates an evolution in the AI trade.
As Big Tech giants reported results this earnings season, Wall Street didn't mind heavy AI spending, but with one key caveat: Everything else in the business had to be humming along.
The big winner of this shift was Meta (META), with its CEO Mark Zuckerberg — fully embracing his post-metaverse, gold chain glow-up — showing that investors won't automatically shy away from massive investments with an uncertain future.
"While we do not intend to provide any quantitative guidance for 2025 until the fourth quarter call, we expect infrastructure costs will be a significant driver of expense growth next year," CFO Susan Li said in a statement.
The warning of bigger AI outlays didn't deter Wall Street.
That's because Zuckerberg and company delivered on the top and bottom lines, flashing financial strength even as they pushed the tech world's boundaries for capital expenditures. Revenue grew 22% in the second quarter and income grew 58%.
And despite losses at its Reality Labs segment reaching $4.5 billion during the quarter, this spending fell to 31% from almost 40% as a share of its total income from operations.
As Zuckerberg told analysts on a conference call last week, "We are in the fortunate position where the strong results that we're seeing in our core products and business give us the opportunity to make deep investments for the future. And I plan to fully seize that opportunity."