Meta Stock Plunges 10% After Earnings Miss Despite Strong Revenue Growth
Shares of Meta Platforms tumbled roughly 10% in after-hours trading after the social media giant reported second-quarter earnings that fell short of Wall Street expectations, raising fresh concerns about the soaring cost of its artificial intelligence investments.
While Meta delivered record quarterly revenue of $60.8 billion, up 28% from a year earlier and above analysts’ forecasts, investors were disappointed by weaker-than-expected earnings per share and cautious forward guidance. The company also increased its projected capital spending as it continues pouring billions into AI infrastructure.
The earnings shortfall was driven by several one-time expenses, including $2.4 billion in legal charges and more than $1 billion in severance costs, which weighed on profitability. Net income declined compared with the same period last year, while free cash flow dropped sharply as AI-related investments accelerated.
Chief Executive Mark Zuckerberg reiterated that AI remains the company’s top strategic priority, emphasizing investments in next-generation computing infrastructure and AI-powered products. However, investors appeared unconvinced that the massive spending will translate into meaningful near-term returns.
Meta also projected third-quarter revenue of $61 billion to $64 billion, a range that came in below many analysts’ expectations. At the same time, the company lifted the lower end of its 2026 capital expenditure forecast, signaling that AI spending will continue to rise.
Despite the sharp stock decline, Meta’s core business continues to expand. Its family of apps now reaches approximately 3.6 billion daily active users, while platforms including Instagram and Threads continue to grow. Still, investors are increasingly focused on whether the company’s aggressive AI investments can generate sufficient returns to justify the mounting costs.
Source: Yahoo Finance. (Yahoo Finance)
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