Meta Platforms reported strong financial results for the second quarter of fiscal 2025, with sales growing 22% to $47.5 billion and operating margins rising to 43%. The company’s capital expenditures for 2025 are expected to reach $69 billion, up from $68 billion previously estimated.

Despite macro headwinds, Meta’s ad business remains resilient due to superior return on ad spending. The company’s strategy of leveraging AI tools for user engagement and ad monetization is driving positive results, with increased time spent on Instagram and Facebook, more advertisers using AI creative tools, and higher conversion rates.

Morningstar has raised their fair value estimate for Meta to $850 from $770, citing strong quarterly performance and continued AI-led improvements in user engagement and ad monetization. Shares are viewed as marginally undervalued relative to the updated fair value, with potential for growth as Meta expands ad supply on Threads and WhatsApp to increase sales and monetization.

Read more at Morningstar: Ad Engine Firing on All Cylinders Even as AI Costs Mount