Meta Platforms’ Stock Plummets as AI Expenditure Skyrockets to $145B, EPS Falls Short
Meta Platforms experienced a significant setback on Wall Street following the release of its Q2 2026 earnings report, which resulted in shares plummeting nearly 8% in after-hours trading. Despite boasting a robust quarterly revenue of $60.8 billion—an increase of 28% year-over-year and surpassing expectations—the social media behemoth reported earnings per share of a mere $6.18, falling considerably short of the analyst consensus estimate of $7.22.
The real surprise, however, came from Meta’s revised capital expenditure guidance. The company elevated the lower limit of its full-year 2026 capex range to a staggering $130–$145 billion, a noticeable increase from the previous $125–$145 billion range. This suggests a more aggressive AI infrastructure expansion. Meta’s Q2 capital expenditures alone amounted to $31.08 billion, a whopping 83% increase compared to the same period the previous year. Meanwhile, free cash flow plummeted from $8.55 billion to a mere $784 million.
Total costs and expenses skyrocketed 55% year-over-year to $42.03 billion, burdened by $2.4 billion in legal charges and $1.18 billion in severance costs associated with a headcount reduction in May 2026. Despite these figures, CEO Mark Zuckerberg maintained a positive outlook, asserting that “AI is accelerating our core business today, powering our next generation of products.” Although Meta’s 3.6 billion daily active users across its apps—a 3% year-on-year increase—offered some consolation, investors are evidently apprehensive about the mounting costs of Zuckerberg’s AI vision.
Source: CNBC – Meta’s stock drops on disappointing guidance, dwindling free cash flow