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Meta shares fall as AI spending balloons and guidance softens
Revenue rose 28% to $60.8 billion, but net income fell 14% to $15.9 billion and Meta expects third-quarter sales of $61 billion to $64 billion.
Meta shares dropped about 10% after the company reported earnings that highlighted heavy investment in AI and data centers, which also came with weaker guidance, according to Yahoo Finance. The report said Meta plans major spending on capital expenditures as part of its AI buildout.
Meta reported revenue up 28% to $60.8 billion, supported by strong ad impressions that were up 14% year over year. However, net income fell 14% to $15.9 billion, and the guidance discussed in the earnings materials pointed to a tougher near-term setup for earnings.
Meta said it expects 2026 total capital expenditures, including principal payments on finance leases, in the range of $130 billion to $145 billion, with the free cash flow metric shrinking sharply. Yahoo Finance also noted free cash flow fell 91%, indicating the cash impact of the spending pace.
Alongside the financial pressure, the company’s social media scale remained a key pillar. Yahoo Finance pointed to Meta’s large footprint in India, including 837 million WhatsApp and 531 million Instagram daily users, and cited data that Instagram daily active users rose 16% year over year to 531 million between July 18 and July 26, based on Sensor Tower figures via CNBC.