Meta Revenue Climbs 28% as AI Spending Tanks Profits

Meta Platforms Inc. reported second-quarter 2026 revenue of $60.8 billion, a 28% year-over-year increase that beat analyst expectations. Despite the growth, net income fell 14% to $15.85 billion, and earnings per share of $6.18 missed the consensus estimate of $7.13. Following the report, the company's stock price dropped between 8% and 12% in after-hours trading.

The profit decline was driven by a 55% surge in total costs, which reached $42.03 billion. These expenses included $2.4 billion in legal charges related to youth-safety lawsuits and $1.18 billion in severance costs from May layoffs. Most significantly, free cash flow plummeted to $784 million from $8.55 billion the previous year, as quarterly capital expenditure hit $31.1 billion. Meta raised its full-year capital expenditure forecast to between $130 billion and $145 billion to fund AI infrastructure.

To monetize these investments, CEO Mark Zuckerberg confirmed plans to enter the cloud computing market by renting computing power to external customers, including early discussions to lease $10 billion of capacity to Anthropic. The company also partnered with BlackRock to develop a $14 billion data center in El Paso. Zuckerberg stated that AI is accelerating the core business and powering next-generation products, such as Meta Glasses and the Muse Spark 1.1 update. To support this spending, CFO Susan Li announced a shift toward long-term debt, issuing $24.9 billion during the quarter.