Meta’s earnings surged dramatically; it announced a $50 billion share buyback and its first-ever dividend, sending its market cap up nearly $200 billion overnight—what key information deserves attention?

In fact, discussing specific stocks can be rather dull—but many people were astonished that Meta jumped 20% in a single day, prompting all sorts of bizarre commentary. It feels necessary to set the record straight. Meta’s financial reports have always been highly transparent. This time, unusually, the results featured concrete, quantifiable metrics—not just sentiment-driven optimism or speculative forecasts about the future—making this an excellent opportunity to introduce the principles of value investing. There are three key takeaways from this earnings report: 1) Revenue Q4 revenue reached $40.11 billion, up 25%. Meta routinely provides guidance for the next quarter; last quarter’s guidance was $36.5–40.0 billion. This quarter’s actual revenue exceeded even the upper end of that range—and surpassed even the most bullish analyst expectations. (Of course, currency fluctuations played a role here—but we’ll set that aside for now.) The company also issued new guidance for next quarter: $34.5–37.0 billion. For comparison, last year’s Q4 revenue stood at $28.6 billion. Analysts typically use the midpoint ($35.75 billion) as the consensus expectation—though companies are savvy enough to ensure they beat that number. A more realistic expectation would thus be around $36.1 billion, implying a year-on-year growth rate of ~26.2%. Compared with this quarter’s 25% growth, Meta—the proverbial ‘elephant’—is actually accelerating. Even more intriguingly, during its prior earnings call, Meta explicitly warned that advertising revenue this quarter might underperform expectations. Most interpreted this as precautionary guidance—but management pulled off a classic reverse surprise (‘We underestimated—no time to dodge!’). Joking aside, perhaps management simply hadn’t anticipated how strongly Chinese advertisers would step up. This further amplified the degree of upside surprise. Finally, context matters: Google—Meta’s peer—delivered a decent but comparatively lackluster report, with overall growth of just 13% (advertising revenue grew only 11%, the main reason its stock fell post-earnings). 2) Costs Meta’s cost-cutting and efficiency gains are striking. Despite an $8 billion revenue increase, Q4 operating costs actually declined by $2 billion—from $25.7 billion to $23.7 billion. As a result, Q4 operating margin hit 41%; full-year margin rose to 35%, up sharply from 25% last year. This 10-percentage-point jump powerfully demonstrates Meta’s ability—and resolve—to control costs without sacrificing revenue. In truth, this capability has long been widely acknowledged: if Meta truly needed extra margin, trimming RL (reinforcement learning) spending alone could easily add another 10 percentage points. But most investors need to see tangible proof before believing. One particularly noteworthy point concerns projected costs for next year. Last quarter, Meta forecasted full-year 2024 costs at $94–99 billion. By historical precedent, such guidance tends to decline gradually over time—as the company strives to exceed Wall Street’s expectations. This year, however, things changed: after CEO Mark Zuckerberg announced plans to purchase 350,000 H100 AI chips (a massive AI investment), market participants quietly revised upward their cost expectations for 2024.

The much-anticipated quarterly earnings report—what made it so extraordinary?

Last night, NVIDIA released its highly anticipated Q2 earnings report—massively exceeding expectations and becoming the core catalyst behind today’s strong rebound in the AI sector. Let’s analyze this report: First, the headline numbers: • Total revenue: $96.22 billion, up 106% year-on-year and 18% quarter-on-quarter—surpassing the consensus estimate of $92.4 billion; • Net income: $59.69 billion, up 126% year-on-year—more than doubling again; • Gross margin: 75.0%, sustaining its all-time high (past five years’ gross margins: 64.93%, 56.93%, 72.72%, 74.99%, and 71.07%). What’s driving such robust financial performance? Unsurprisingly, data center business—the dominant engine—now accounts for 92% of NVIDIA’s total revenue. Within that, the Blackwell platform continues ramping up rapidly, serving as the primary source of incremental growth. That sky-high gross margin clearly signals: demand and competition aren’t constraints—only supply capacity is. Most exciting to the market was NVIDIA’s forward-looking guidance—again surpassing expectations. First, Q3 revenue guidance stands at $108 billion, ±2%. At the midpoint, that implies ~90% year-on-year growth—potentially marking NVIDIA’s first-ever $100-billion-plus quarterly revenue. Second, the company expects FY2028 revenue to grow ~70% year-on-year—far above the prior consensus of just 40–45%. This sharp upward revision was the key driver behind NVIDIA’s post-earnings stock price reversal and rally. Management stated that current demand vastly exceeds even its supply-constrained guidance range—and that supply bottlenecks are expected to persist through the end of FY2028. With the next-generation Vera Rubin platform entering full-scale production in August, Rubin is expected to contribute ~20% of data center revenue in Q3, rising to ~40% in Q4—fueling continued high growth. In volume terms, NVIDIA expects to ship over 13,000 Rubin racks by year-end, and over 120,000 racks throughout FY2027. Of course, the report isn’t flawless. The main concern lies in gross margin guidance: for Q3, it’s projected at 73.5–74.5%, down slightly quarter-on-quarter and below the market’s optimistic prior expectation of 75%. Management clarified, however, that this modest decline stems primarily from rising procurement costs for HBM memory chips—not weakening demand. Overall, this report dispels several key market concerns: 1. Has AI capital expenditure peaked? NVIDIA’s answer is unequivocal: Not at all. Demand remains robust—absent constraints from TSMC’s CoWoS advanced packaging capacity and SK Hynix/Samsung HBM supply limitations, growth would be even faster. 2. Is NVIDIA overly reliant on a few large cloud customers? A longstanding market concern has been NVIDIA’s heavy concentration among hyperscalers—Microsoft, Google, and Amazon account for the bulk of its revenue. If any one of them suddenly cut capex, the theory goes, NVIDIA would collapse. Yet this report shows explosive growth among non-cloud customers—including enterprises, AI startups, and industrial AI adopters—which now represent nearly half of data center revenue.

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