Meta Platforms' stock experienced a notable decline following the release of its second-quarter 2026 financial results, as the company missed earnings per share (EPS) expectations despite reporting robust revenue growth. The social media giant posted an EPS of $6.18, a miss compared to the Wall Street consensus estimate of $7.17. This earnings shortfall comes even as Meta reported total revenue of $60.8 billion, an increase of 28% year-over-year, slightly beating analyst predictions.
The significant increase in Meta's total costs and expenses, which rose 55% year-over-year to $42.03 billion, played a crucial role in the reduced profitability. These expenses included $2.40 billion in charges related to legal proceedings and $1.18 billion in severance expenses stemming from headcount reductions in May 2026. This surge in spending, particularly on artificial intelligence infrastructure, contributed to a substantial rise in capital expenditures to $31.1 billion for the quarter, more than double the amount spent in the same period last year.
Despite the earnings miss, Meta's core advertising business demonstrated continued strength. Ad impressions across the Family of Apps increased by 14% year-over-year, with the average price per ad rising by 12%. Daily active people (DAP) also saw a 3% increase, reaching 3.60 billion on average for June 2026. Mark Zuckerberg, Meta's founder and CEO, expressed optimism about AI's role in accelerating the company's core business and driving future opportunities. However, the market's reaction indicates that investors are closely scrutinizing the balance between revenue growth and the escalating costs of Meta's ambitious AI initiatives. The company also raised its full-year capital expenditure guidance, signaling continued heavy investment in AI infrastructure.
