Meta's AI spending spree is Wall Street's focus in second-quarter earnings

Core Viewpoint - Meta Platforms Inc. is experiencing a slowdown in revenue growth, with expectations of a decline from 22% to 15% year-over-year in the second quarter, marking the slowest growth rate since early 2023 [1][19]. AI Strategy and Investments - Meta's recent hiring spree in AI is aimed at regaining competitive footing, with total expenses projected between $113 billion to $118 billion for 2025, indicating a slight increase due to these investments [2][19]. - The company has made significant investments in AI, including a $14.3 billion investment in Scale AI, leading to the establishment of Meta Superintelligence Labs [4][20]. - Meta's AI strategy has faced challenges, particularly with the release of Llama 4, which has not met developer expectations and has led to a reevaluation of the company's AI approach [6][10][17]. Competitive Landscape - Meta's attempts to mimic innovations from competitors, particularly in AI, have backfired, prompting a need for a strategic overhaul [7][18]. - The competitive environment for AI talent is intense, with companies like OpenAI, Google, and Anthropic also vying for top researchers, reminiscent of the self-driving car talent race in 2017 [22][23]. Future Outlook - Despite current AI struggles, Meta's core online advertising business remains robust, and there is optimism that AI investments will yield positive returns in the future [19][21]. - Analysts suggest that Meta's commitment to AI could lead to increased capital and operational expenditures, indicating a long-term focus on AI development [20][21].