Meta’s blowout year continues after the company reported another stellar financial quarter on Wednesday. But shares fell in after-hours trading after the company missed Wall Street expectations for daily active users.

Wall Street analysts had high expectations for the Instagram and WhatsApp parent company, projecting an 18% jump in sales year over year. The company reported $40.6bn in sales, a 19% increase year over year that outpaced investor expectations of $40.19bn. Meta, which saw a 25% jump in its share price over the past two months, reported $6.03 in earnings per share (EPS), surpassing Wall Street’s expectations of an EPS of $5.29.

The company reported that its number of daily users was worse than analysts expected, notching 3.29 billion “daily active people”, a 5% increase but less than the anticipated 3.31 billion.

“Overall this has been a good quarter I’m pretty amped about the work we’re doing right now,” Mark Zuckerberg, Meta’s chief executive, said during the earnings call. “This may be the most dynamic moment that I’ve seen in our industry … if we do this well the potential for Meta and everyone building with us is massive.”

The social media firm has been ramping up its investment in AI, and analysts are bracing for a spike in company-wide spending as a result. Meta’s guidance indicated capital expenditure could hit between $38bn and $40bn in 2024 and reach up to $50bn in 2025. But that investment may already be paying off. Zuckerberg said that Meta AI was on track to be the most-used AI assistant in the world and now has more than 500 million monthly active users. The button to access Meta AI has been built into the search bar in the Instagram and Facebook apps.

The company released its latest AI model, called Llama 3.1 405B, in July. Earlier this month, it announced an AI video maker, Movie Gen, that can generate footage with sound. Zuckerberg said the company was also currently working with the public sector to begin using Llama within the government. The company is not focusing on monetization when it comes to Meta AI yet, according to the firm’s chief financial officer, Susan Li.

“We’re really focused on making Meta AI as engaging and valuable a consumer experience as possible,” Li said on the call. “This is sort of a playbook for us where we really dial in the consumer experience before we focus on monetization.”

Analysts have expressed concern over the company’s miss in daily active users and what it could mean for the company’s continued investment in AI.

“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,” said Jasmine Enberg, a principal analyst at market research firm eMarketer.

The company is also expanding its hardware line. At its annual developer conference in September, Meta debuted a prototype of a new augmented reality headset called Orion. The company’s latest entry into the smart-eyewear game can project digital representations of media, people, games and communications on to the real world. The Facebook-parent company also debuted the Quest 3s, a more affordable addition to the company’s line of mixed-reality headsets, which hit shelves earlier this month.

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The company continues to face legal pressure for the effects of its products on children’s mental health and safety, including a 2023 lawsuit filed by dozens of state attorneys general that alleges the company knowingly makes its platforms addictive to teens. However, the company secured a recent victory when a judge dismissed a shareholder lawsuit claiming the company misled them about its ability to ensure the safety of children on the platform.

In September, Meta announced that the accounts of all Instagram users under 18 would be made private by default.