Meta Platforms Inc. shares fell approximately 10% Wednesday after the company reported second-quarter earnings that missed analyst expectations [1].
The decline reflects investor anxiety over the rising costs of artificial intelligence development. While the company continues to grow its top line, the steep increase in capital expenditures is eating into profitability and cash reserves.
Meta reported Q2 2026 sales of $60.8 billion, representing a 28% increase year-over-year [7]. However, total costs for the quarter rose 55% to $42.03 billion [8]. This spending included $2.40 billion in legal expenses and $1.18 billion in severance expenses [10, 11].
"Meta shares dropped after the company reported Q2 EPS that was below expectations," Julia Boorstin of CNBC said [1].
The company's free cash flow saw a significant contraction, falling to $784 million [4]. This is a sharp drop from the $8.55 billion reported in the same quarter of 2025 [5]. To support its AI ambitions, Meta provided capital expenditures guidance for 2026 ranging from $130 billion to $145 billion [6].
Revenue guidance for the next quarter also fell short of Wall Street forecasts. Meta projected revenue between $61 billion and $64 billion, with a midpoint of $62.5 billion [2]. This is lower than the $63.15 billion analysts had expected [3]. Some reports placed the guidance as low as $60 billion to $63 billion [12].
Despite the miss on earnings per share, some reports noted that revenue slightly beat estimates for the quarter [2]. The company's operating margin for Q2 2026 stood at 31% [9].
Meta is headquartered in Menlo Park, California, and is traded on the NASDAQ under the ticker META [1, 3].
“Meta shares fell approximately 10% Wednesday after the company reported second-quarter earnings that missed analyst expectations.”
The market is currently weighing Meta's long-term AI potential against the immediate financial burden of building that infrastructure. The massive gap between 2025 and 2026 free cash flow suggests that the company is in a high-spending phase that may not yield immediate efficiency gains, leading investors to penalize the stock despite steady revenue growth.
