Meta (META) Stock Faces Pressure After Higher AI Spending

TLDR

• Meta’s Q2 revenue rose 28% year-over-year to $60.8 billion, beating Visible Alpha consensus estimates by about 1%.
• Family of Apps revenue increased 28% to $60.4 billion, supported by stronger engagement and AI-powered ad targeting.
• Total expenses jumped 55.2% to $42 billion as Meta increased spending on AI infrastructure and computing capacity.
• Operating income, net income, and diluted EPS missed consensus estimates as higher costs weighed on profitability.
• Meta raised its 2026 capital expenditure guidance to $165 billion-$169 billion due to faster AI infrastructure investment.

Meta Platforms (META) reported second-quarter revenue above market expectations, but rising artificial intelligence spending weighed on profitability and pressured Meta stock after the results. The company continued to benefit from stronger advertising demand and AI-based improvements across its Family of Apps business. At the same time, higher infrastructure costs reduced earnings performance and lifted concerns about near-term margins.

Meta Platforms, Inc., META

Meta Stock Slips as Profit Misses Forecasts

Meta generated $60.8 billion in second-quarter revenue, up 28% from a year earlier. The result came about 1% above Visible Alpha consensus estimates. Family of Apps revenue reached $60.4 billion, also rising 28%, as stronger recommendations and ad targeting supported user activity and advertising sales.

Profit measures came in below expectations. Total expenses climbed 55.2% to $42 billion and exceeded consensus estimates by 8.4%. Operating income, net income, and diluted earnings per share missed forecasts by 12.6%, 14.2%, and 14.0%, respectively. Meta stock declined after the report as investors focused on the faster rise in costs.

AI Infrastructure Spending Rises Again

Meta increased its full-year 2026 capital expenditure forecast to between $165 billion and $169 billion. The company linked the higher range to faster investment in AI infrastructure, data centers and computing capacity. Higher memory prices also added to planned spending.

Management said AI remains its top strategic priority. The company expects operating income to grow from the prior year even as expenses continue to rise. Operating cash flow remains strong enough to support the higher investment program further.

Advertising Growth Supports Revenue Outlook

Daily active user levels across key markets remained broadly in line with expectations. AI-powered recommendations continued to improve engagement across Facebook, Instagram and other Meta platforms. These gains helped support stronger advertising performance during the quarter.

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For the third quarter, Meta expects revenue of $61 billion to $64 billion. Visible Alpha consensus now points to $63.2 billion, up 0.2% from estimates before the earnings release. Analysts also raised full-year revenue estimates by 0.3% to $253.9 billion.

Analysts raised their spending forecasts after Meta increased its AI investment plan. Full-year expense estimates rose 2.5%, while capital expenditure estimates increased 1.9%.

Profit forecasts moved lower. Analysts reduced expectations for full-year operating income, net income, and diluted EPS as higher