Meta Q2 2026 Earnings: Revenue Beats on Ad Strength, Profit Misses as AI Spending Surges
Meta's ad business kept growing fast, but heavy AI spending and one-time charges dragged quarterly profit well below expectations.
| Q2 2026 | Reported | Expected | Surprise |
|---|---|---|---|
| EPS | $6.18 | $7.36 | -16.0% |
| Revenue | $60.80B | $61.37B | -0.9% |
Key takeaways
- Meta’s revenue grew 28% from a year earlier and came in slightly above what analysts expected, driven almost entirely by its advertising business — ad revenue rose 27% as advertisers ran more ads (impressions up 14%) and paid more per ad (up 12%).
- Profit per share fell well short of expectations, but the miss was largely due to one-time items: a $2.4 billion legal charge and about $1.18 billion in severance costs tied to cutting roughly 8,000 jobs, rather than a breakdown in the core business.
- Total costs and expenses jumped 55% versus a year ago, which squeezed the quarter’s operating margin down to about 31% from 43% a year earlier — a reminder that heavy AI spending and the one-time charges are cutting into profitability right now even as sales keep climbing.
- Looking at the trailing twelve months rather than just this quarter, Meta’s underlying profitability still looks solid — roughly a 38% operating margin and just under 30% net margin — but profit growth over that period (down about 4%) has lagged well behind revenue growth (up about 28%), showing spending is rising faster than earnings.
- Meta is spending aggressively to build AI infrastructure: capital expenditures hit $31.1 billion in the quarter, nearly double what it spent a year ago, and the company raised its full-year spending outlook to $165–169 billion while narrowing planned capital investment to $130–145 billion for the year.
- For the current quarter, Meta guided to revenue of $61–64 billion and flagged a roughly 1% currency headwind to growth, suggesting management expects the ad business to keep growing at a similar pace.
- CEO Mark Zuckerberg said AI is already improving Meta’s core apps and helping advertisers get better results, and framed the company’s strategy as bringing advanced AI capabilities directly to individual users rather than concentrating that technology in a few hands.
Q2 2026 in context
| Metric | Jun 2026 | Jun 2025 | Change |
|---|---|---|---|
| Revenue | $60.8B | $47.5B | +28.0% |
| Net income | $15.8B | $18.3B | -13.6% |
| Free cash flow | $1.7B | $9.0B | -80.6% |
| Diluted EPS | $6.18 | $7.14 | -13.4% |
| Gross margin | 81.4% | 82.1% | -0.8 pts |
| Operating margin | 30.9% | 43.0% | -12.1 pts |
| Net margin | 26.1% | 38.6% | -12.5 pts |
Figures for the quarter ended Jun 2026 and the quarter ended Jun 2025, as reported to the SEC.
Each company's quarter ending in calendar Q2 '26, as reported to the SEC. A peer that reported no revenue figure for that quarter is left out.
How the stock took it
Meta Platforms, Inc. closed at $593.41 on Jul 28, 2026, the last session before the report, and at $539.03 on Jul 30, 2026, the first session after it — -9.2% across the report.
| Earlier report | Close before | Close after | Change |
|---|---|---|---|
| Apr 30, 2026 | $669.12 | $608.75 | -9.0% |
| Oct 30, 2025 | $751.67 | $648.35 | -13.8% |
| Jul 31, 2025 | $695.21 | $750.01 | +7.9% |
Closes from the market's daily record. Each figure spans the report date — from the last session that closed before it to the first that closed after — because a company may report before the open or after the close.
Fundamentals
| Metric | Value | Period |
|---|---|---|
| Gross margin | 81.8% | Trailing 12 months |
| Operating margin | 38.1% | Trailing 12 months |
| Net profit margin | 29.8% | Trailing 12 months |
| Pretax margin | 38.4% | Trailing 12 months |
| EPS | $26.56 | Trailing 12 months |
| Revenue growth (YoY) | 27.6% | Trailing 12 months |
| EPS growth (YoY) | -3.7% | Trailing 12 months |
| Return on equity | 29.7% | Trailing 12 months |
Sources: company report · earnings call