After the bell, the company will announce its second-quarter earnings.

• Meta's digital ads business is expected to drive a 20% revenue growth in the second quarter.
• Last week, Alphabet's YouTube business underperformed, while Pinterest's forecast on Tuesday was weaker than anticipated.
• Investors are heavily focusing on artificial intelligence and virtual reality, with Meta being a major player in this area.

The company is scheduled to release its second-quarter earnings report on Wednesday following the end of regular trading.

Here's what analysts polled by LSEG are expecting:

• Earnings per share: $4.73
• Revenue: $38.31 billion

Meta's ad revenue is projected to increase by 19% to $37.6 billion, despite a difficult economy in 2022 that led advertisers to cut spending. Wall Street expects sales growth of 20% from $32 billion a year earlier, as Meta's business continues to recover.

Meta's AI spending is becoming a major focus for investors, as the company continues to invest heavily in data center infrastructure and computing resources to train AI models and run massive workloads.

Last week, CEO Mark Zuckerberg admitted that Meta and other companies may be spending too much on their AI development, but he stated that they have no other option if they want to remain competitive in the future.

Being behind in technology can hinder your progress for the next decade, as Zuckerberg stated on a podcast with Emily Chang, mirroring Sundar Pichai's comments on Alphabet's earnings call.

In April, Meta announced that its 2024 capital expenditures would be between $35 billion and $40 billion, which exceeded its previous forecast of $30 billion to $37 billion.

By the end of 2024, Meta's computing infrastructure will consist of 350,000 Nvidia H100 graphics cards, which are used for training large language models and other AI software. Zuckerberg also stated that Meta's computing infrastructure would have "almost 600k H100 equivalents of compute" if other GPUs are included, which amounts to billions of dollars in spending.

Last week, Pichai informed analysts that the risk of underinvesting in Google's AI is greater than the risk of overinvesting during a downturn.

Last week, Meta unveiled the latest iteration of its Llama AI model, featuring three free variants for developers to utilize, demonstrating the company's commitment to keeping pace with OpenAI and Google in the realm of AI technology.

On Wednesday, Meta's report on the digital ad market revealed some signs of weakness. Alphabet reported lower-than-expected ad revenue from YouTube last week, and on Tuesday, it issued disappointing third-quarter guidance, causing a 15% plunge in the stock after hours.

Pinterest's finance chief, Julia Brau Donnelly, informed analysts on an earnings call that while the technology, autos, and financial services sectors were "driving forces" for the company's ad business, growth in those areas was "partially tempered by softer performance among food and beverage advertisers, who are grappling with broader challenges within that category."

Meta's Reality Labs division, which is responsible for its metaverse technologies, is still experiencing a significant financial loss. Analysts predict that the unit will record an operating loss of $4.55 billion, bringing its total losses since late 2020 to approximately $50 billion. Despite this, revenue in the unit is expected to increase by 34% from the previous year to $371 million, primarily from the sales of Quest VR headsets and smart glasses.

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