Facebook's parent company Meta Platforms reported higher-than-expected current-quarter revenue on Wednesday, predicting strong Christmas ad spending that should continue to offset its significant investments in artificial intelligence.

The Menlo Park, California-based company's stock dropped 2.5 percent during after-hours trade.

Analysts believe AI-powered advertising tools and stronger monetization of short-form video product Reels have bolstered Meta's revenue growth this year.

Many analysts have predicted a possible blockbuster year for digital ads in 2024 as economic forecasts improve, citing easing interest rates and sustained consumer spending.

Advertising accounts for the vast majority of Meta's revenue, meaning higher marketing spend during the holiday season could provide a crucial boost to the company's bottom line, according to analysts.

Meta reported third quarter profit of $6.03 per share, compared with estimates of $5.25 per share, per data compiled by LSEG.

Third-quarter revenue stood at $40.59 billion, compared with analysts' estimates of $40.29 billion.

The company expects between $45 billion and $48 billion in fourth-quarter revenue, compared with analysts' estimates of $46.31 billion, according to data from LSEG.