Five of the seven Mag 7 stocks report earnings this week and the concentration risk to the major indices will have investors on alert. Meta Platforms (META) is scheduled to report its third-quarter 2025 results after the market closes on Wednesday. Analysts will be closely watching to see if the social media giant's heavy investments in artificial intelligence can continue to translate into robust ad revenue growth. The company has ramped up investments into its AI infrastructure build out but has also been recruiting and pillaging its rivals for talent with major monetary packages.

The big question may be about the amount of investment the company plans to invest in its AI buildout and whether that can be monetized. Last quarter, Meta said: "We expect full year 2025 total expenses to be in the range of $114-118B, narrowed from our prior outlook of $113-118B and reflecting a growth rate of 20-24% year-over-year. While we are still very early in planning for next year, there are a few factors we expect will provide meaningful upward pressure on our 2026 total expense growth rate. We expect these factors will result in a 2026 year-over-year expense growth rate that is above the 2025 expense growth rate. We currently expect 2025 capital expenditures, including principal payments on finance leases, to be in the range of $66-72B, narrowed from our prior outlook of $64-72B and up approximately $30B year-over-year at the mid-point.” The bottom line is that META continues to invest in AI and talent with expectations they will be able to monetize its massive user base across its platforms.

Meta reported family daily active people was 3.48B on average for June, an increase of 6% year-over-year. Ad impressions delivered across its family of apps, which includes Facebook, Instagram, and WhatsApp, increased by 11% year-over-year. Average price per ad increased by 9% year-over-year, according to the company on its last earnings call.

Meta stated last quarter: "We expect third quarter 2025 total revenue to be in the range of $47.5-50.5B with the consensus approximately $49.4 billion, which would represent a 21.8% increase over 3Q 2024's figure of $40.59 billion.” Analysts project an EPS of around $6.60, a 9.5% increase year-over-year.

Meta's core advertising business remains the primary driver of revenue and profits. Analysts expect strong advertising revenue of $48.5 billion for 3Q 2025, driven by AI advancements that have improved ad performance. Meta's AI is being leveraged to boost user engagement across its family of apps. Ad impressions across these platforms increased by 11% year-over-year in 2Q 2025.

Meta stock is up over 28% this year and is just 5% off of its all-time high of $796 in August. The bar is high going into earnings with the Option Market pricing in a +/- 6% one day move post results ($45) as of Monday’s closing prices.

Investors will be focused on Meta's spending, particularly on AI and data centers. The company has guided for full-year 2025 capital expenditures (CapEx) in the range of $66 billion to $72 billion. The market is looking for reassurance that this spending will generate returns. With a base of over 3 billion users, Meta Platforms has the ‘eyeballs’ that advertisers love, but the amount of investment and monetization may be the key to this report.

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