Meta Platforms shares declined after the company reported second-quarter earnings that missed Wall Street expectations.
The company posted stronger-than-expected revenue growth, but lower earnings per share (EPS) and higher costs related to artificial intelligence investments pressured investor sentiment. Shares fell about 9% in premarket trading after the results.
The decline followed the release of Meta’s Q2 financial report, which showed that profit growth faced pressure from legal expenses, severance costs, and increased spending on infrastructure.
Meta reported earnings per share of $6.18 for the quarter, below analyst expectations of around $7.14. Revenue reached $60.8 billion, exceeding forecasts of $60.2 billion and marking a 28% increase from the previous year.
According to the earnings report, Meta’s EPS figure included several one-time expenses that reduced quarterly profit. The company recorded a $2.4 billion charge linked to legal contingencies and $1.2 billion in severance expenses.
Without these charges, Meta’s earnings performance would have been stronger. However, investors focused on the reported profit figure as the company continues to increase spending across artificial intelligence projects and data center expansion.
Meanwhile, Meta’s advertising business continued to deliver growth during the quarter. Advertising revenue reached $59.3 billion, slightly above analyst expectations of $59.07 billion.
The company’s platforms, including Facebook and Instagram, continued generating most of its revenue. Meta has also linked improvements in advertising performance to artificial intelligence tools used for recommendations and ad targeting.
Moreover, Meta raised the lower end of its 2026 capital expenditure forecast as it continues investing in artificial intelligence infrastructure. The company now expects capital spending between $135 billion and $145 billion, compared with the previous range of $125 billion to $145 billion.
The higher spending includes investments in data centers, servers and computing equipment needed to support AI development. Meta has also been expanding its plans to develop and provide AI products for businesses.
CEO Mark Zuckerberg said, “AI spending is accelerating every part of our core business,” as the company continues building AI models and tools.
Meta also announced a partnership with BlackRock to develop a $14 billion data center project in Texas. BlackRock will hold an 80% stake in the facility, while Meta will own the remaining 20%.
Additionally, Meta introduced its Muse Spark 1.1 AI model with pricing designed to compete with other AI providers. The company is offering lower costs for developers using its AI models.
Notably, Meta’s third-quarter revenue forecast also added pressure after the company projected revenue between $61 billion and $64 billion. The midpoint of the guidance came below Wall Street expectations of about $63.1 billion.
The company’s lower forecast range increased market attention toward future revenue growth and the financial return from its AI investments.
Meta’s free cash flow also declined during the quarter. The company reported $784 million in free cash flow, compared with $8.5 billion during the same period last year.
Nevertheless, analysts continue tracking Meta’s long-term AI strategy as the company works to build new products and commercial services. Zuckerberg said the company expects AI agents and business-focused AI tools to become part of its future product offerings.
Meta’s stock has faced pressure in 2026, with shares already trading lower before the earnings release. The latest decline followed concerns surrounding rising expenses, slower guidance growth, and the cost of expanding AI infrastructure.
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