Meta Shares Drop as AI Spending Erases Profit Gains

The social media conglomerate Meta reported a 14 percent decline in second-quarter profits to $6 billion, causing its share price to drop 8 percent. This financial dip follows massive investments in AI infrastructure, with spending estimated between $130 billion and $145 billion for 2026.

Despite the profit decline, the company saw double-digit year-over-year growth in time spent on Instagram. Meta attributed this increase to the deployment of large language models that automatically scan every public post and Reel to analyze topic and tone. Mark Zuckerberg identified these AI-powered recommendation systems as a key building block for personalization, which resulted in a 15 basis point increase in Instagram sessions.

Beyond financial and technical updates, the company faces ongoing legal risks. Chief Financial Officer Susan Li noted that Meta continues to face scrutiny and scheduled trials concerning the addictive nature of its platforms for youth.