What's Behind The 40% Rise In META Stock?

Core Insights - META's stock has experienced a 43% increase over the last six months, driven by strong quarterly performance and significant investments in AI that enhanced the advertising business [2][4] - The company reported a 22% year-over-year revenue growth to $47.5 billion in Q2 2025, with earnings per share (EPS) reaching $7.14, marking the 10th consecutive quarter of exceeding profit estimates [6] - META's advertising revenue grew by 21% year-over-year in Q2 2025, attributed to AI-driven ad efficiency and increased user engagement across its platforms [6] Financial Performance - META returned $9.76 billion to shareholders through share repurchases and $1.33 billion in dividends in Q2 2025, reflecting strong capital management [3] - The company's P/E multiple increased by 33.5%, contributing to the stock price surge [4] - Forecasted capital expenditures for 2025 are between $66 billion and $72 billion, with plans to expand computing capacity to over 2 million GPUs by FY26 [6] Challenges and Risks - The Reality Labs division reported operating losses of approximately $4.5 billion in Q2 2025, indicating ongoing financial challenges despite innovation efforts [7] - Regulatory pressures are emerging, particularly with META's decision to ban political and social issue advertisements in the EU starting October 2025 due to new regulations [6]