Instagram's ad business is growing even faster than Wall Street expected

With Facebook's Q2 earnings right around the corner on July 27, Wall Street is taking stock of its estimates for the company's mammoth ads business.

One particularly bright spot: Instagram, the photo sharing app that's owned by Facebook.

"Our conversations would suggest Instagram ad loads are rising faster than our initial expectations," UBS analyst Eric Sheridan writes in a note to investors on Tuesday.

UBS has subsequently raised its estimate to $550 million in Instagram revenue for Q2.

Facebook doesn't actually break-out Instagram's financial numbers, but Sheridan estimated that $330 million of its $5.38 billion in revenue last quarter came from the photo-sharing app.

"Given the momentum we have seen over the past 9 months (i.e., since the rollout of monetization) and the continued strength in Instagram user growth (reaching 500mm users in June), we are raising our full-year estimate for Instagram to $2.27bn for 2016," Sheridan continues.

Given that Instagram only started ramping up its ad business broadly last year, those numbers imply that Instagram has essentially created a $2 billion business in about a year.

The UBS estimates are quite a bit higher than another estimate we saw this week: SunTrust's Robert Peck, who has called Instagram the "story of 2016" for Facebook, pegs its revenue at ~$1.5 billion in 2016 and ~$3 billion in 2017.

Here's how UBS expects Instagram's revenue to continue to rocket: