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Meta's impressive year continued with another strong financial quarter, despite a dip in its stock price during after-hours trading on Wednesday. The parent company of Instagram and WhatsApp reported $40.6 billion in sales, marking a 19% year-over-year increase and surpassing investor expectations of $40.19 billion. With shares leaping 25% in the past two months, Meta also reported earnings per share (EPS) of $6.03, notably higher than Wall Street’s projected $5.29.

However, the company did fall short concerning its daily user count. Meta logged 3.29 billion daily active users, which represents a 5% increase but fell short of the anticipated 3.31 billion. Nonetheless, CEO Mark Zuckerberg expressed optimism during the earnings call, noting, "Overall this has been a good quarter. I'm pretty amped about the work we're doing right now... if we do this well the potential for Meta and everyone building with us is massive."

Meta has significantly ramped up its investment in artificial intelligence, which has sparked concern among analysts about increased company-wide spending. The firm forecasts capital expenditures potentially reaching between $38 billion and $40 billion in 2024, and possibly climbing to $50 billion by 2025. However, these investments may already be yielding results; Zuckerberg highlighted that Meta AI, now integrated into the Instagram and Facebook search bars, boasts over 500 million monthly active users.

In July, Meta released its latest AI model, Llama 3.1 405B, and recently introduced Movie Gen, an AI video generator capable of creating footage with sound. Zuckerberg revealed ongoing collaborations with the public sector to incorporate Llama into government operations.

Despite the positive financial performance, analysts have raised concerns regarding Meta’s future investment in AI and the associated costs. Jasmine Enberg, a principal analyst at eMarketer, remarked, "Meta needs to prove that it can continue to cover its AI costs as they rise next year, and any weakness in its core ad business could make investors nervous as they continue to wait for a return on Meta's bigger AI bets."

In addition to AI advancements, Meta is expanding its hardware offerings. The company introduced a prototype augmented reality headset, Orion, at its annual developer conference in September. Meta also launched Quest 3s, an affordable mixed-reality headset that hit the market earlier this month.

Legal challenges persist for Meta concerning the impact of its platforms on children's mental health. A significant lawsuit filed by several state attorneys general claims that the firm knowingly makes its platforms addictive to teens. Despite this, Meta recently scored a legal victory when a judge dismissed a shareholder lawsuit alleging that the company misled investors about its ability to safeguard children on its platforms. In a proactive measure, Meta announced in September that Instagram accounts for all users under 18 would now be private by default.