Artificial intelligence is taking shots in the arms of digital advertising.
Meta and alphabet Both sales and revenues that beat Wall Street expectations were reported, but the strength of digital ad spending was noticeable.
Meta CEO Mark Zuckerberg said in his revenue call that it contributed to a 22% increase in second quarter sales, reaching $47.52 billion, as AI helped to thwart “enhance the efficiency and profits of the overall advertising system.”
Metafinance chief Susan Lee also told analysts in a follow-up revenue call on July 30 that the online advertising market appears to have improved since April.
In April, Li said the Asia-based online retailer had pulled back digital advertising spending amid wider macroeconomic uncertainty due to President Donald Trump’s strict tariffs and closing loopholes in De Minimis trade.
In the quarter, Li said there has been a notable “improvement” for e-commerce companies based in Asia, with digital ad spending on the platform increasing along with small North American-based advertisers.
“In general, there is a further quarter of the demand for healthy advertising,” Li said of the ad pickup.
“Today, digital advertising is generally going well, just an extension of the fact that consumers are still strong,” says Gil Luria, Head of Technology Research at Da Davidson.
“There is optimism that consumer spending will be maintained, and therefore all downstream markets will be maintained,” Luria said.
“I think one of the things that revenue has taught me is that when your core business is on track, especially when your core business is already benefiting from the investments you’ve made with AI,” Jasmine Enberg, vice president and chief analyst at Emarketer, said of the second quarter of Meta.
The ongoing jaw-dropping pace of AI spending also doesn’t seem to slow down anytime soon.
Alphabet added $10 billion to its 2025 forecast for capital expenditures. It is now pinned at $85 billion, with Meta raising the lowest capital expenditures between $66 billion and $72 billion instead of $660 billion to $72 billion.
Investors showed no signs of fear about meta and alphabet’s massive AI spending.
Outside of the high-tech giants, reddit Strong revenue for the second quarter was $500 million, representing a 78% increase from the previous year, helping to raise the company’s shares by 20%.
“They stood up like Phoenix and had some extraordinary results,” Luria said of Reddit. This caused a plunge of more than 15% in February after reporting more than expected user numbers due to changes in Google’s search algorithm.
Reddit’s blockbuster quarter contrasted with similar sized peers snap and Pinterestboth reported lukewarm water quarterly profit this week.
SNAP’s second quarter sales increased by only 9% year-on-year, and missed Wall Street estimates on the average global revenue per user.
The contributing mistake was a failed update to Snap’s advertising platform, which hurt the company’s “top line growth,” Snap CEO Evan Spiegel said in an investor’s letter.
Snapchat parents on Wednesday added Reddit to their list of competitors in their latest 10-Q filing on Wednesday, indicating their potentially fast-growing rivalry.
Snapchat operator snap Evan Spiegel’s head shows us a new generation of glasses.
Andrej Sokolow | Photo Alliance | Getty Images
Meanwhile, Pinterest sank more than 10% on Thursday after reporting second-quarter earnings that missed earnings per share.
Pinterest Finance chief Julia Brau Donnelly told analysts in a revenue call that the company is still aware of tariff-related concerns and “broader market uncertainty,” as previously shown in May.
Unlike Meta, Donnelly says that “Asia-based e-commerce retailer has pulled back spending in the US,” highlighting how some advertisers are drawn to larger online advertising platforms amid signs of global economic uncertainty.
“There’s little room for mistakes or failure,” Enberg said of quarterly revenue reports from small tech companies such as Snap and Pinterest.
Monitoring: Technology growth rates remain robust.
