Meta (NASDAQ: META) Shares Fall 7.45% After Hours to $542.00 Despite 27% Q2 Ad Revenue Growth

Meta Platforms shares fell 7.45% in after-hours trading Wednesday, July 29, 2026, sliding to $542.00. The drop came despite revenue climbing 28% year-over-year to $60.8 billion, or 27% on a constant currency basis. Diluted EPS of $6.18 missed the $7.10 analyst estimate by a wide margin. Surging AI infrastructure spending overshadowed otherwise strong advertising growth.

Meta Beats Revenue But Misses On Earnings

Meta (NASDAQ: META) reported second-quarter revenue of $60.8 billion, topping the $59.50 billion analyst consensus comfortably. Ad impressions rose 14% year-over-year, while the average price per ad climbed 12%. Net income fell 14% to $15.8 billion, reflecting sharply higher costs.

• Diluted EPS came in at $6.18, down 13% year-over-year and well below estimates.
• Operating margin compressed to 31%, down from 43% in the same quarter last year.
• Total expenses jumped 55% year-over-year to $42 billion, including $2.4 billion in legal charges.

Family daily active people grew 3% year-over-year across Meta’s core app ecosystem. Despite this solid engagement growth, rising costs clearly outpaced revenue expansion during the quarter.

Why Meta Stock Sold Off So Sharply

Meta shares closed regular trading Wednesday at $585.61 before tumbling in after-hours activity. The stock fell as much as 7.45% to $542.00 shortly after the earnings release. Later trading snapshots showed the decline deepening further as investors digested the full results.

• Free cash flow collapsed to just $784 million, down sharply from prior quarters.
• Operating cash flow still totaled a healthy $31.86 billion for the period.
• The stock’s 52-week range spans $520.26 to $796.25, with shares testing that lower band.

Investors appear increasingly skeptical about whether Meta’s massive AI investment cycle will generate adequate returns. This margin compression, paired with the EPS miss, triggered the sharpest post-earnings reaction in recent quarters.

$META did not miss

Adjusting for severance ($1.2B) and legal charges ($2.4B) EPS would be around $7.3 (vs around $7.2 expected)

The reason for the drop is likely due to FCF nearly being negative https://t.co/12tkyhGWvE

— Vebjørn (@VJNCapital) July 29, 2026

AI Spending Guidance Raised For Full-Year 2026

Meta raised the low end of its full-year 2026 capital expenditure guidance to $130 billion. That compares with the prior range of $125 billion to $145 billion. Full-year expense guidance also increased to $165 billion to $169 billion.

• CEO Mark Zuckerberg reiterated focus on maximizing AI capacity through 2026 and 2027.
• Meta’s effective tax rate outlook rose to 15-17%, up from 13-16% previously.
• The company ended the quarter with $90.26 billion in cash and marketable securities.

Meta and BlackRock also unveiled a $14 billion data center venture in El Paso on July 28. BlackRock funds will own 80% of that project, helping ease pressure on Meta’s balance sheet.

Q3 Guidance Points To Continued Growth

Meta guided third-quarter revenue toward a range of $61 billion to $64 billion. That implies mid-to-high 20% year-over-year growth at the midpoint of guidance. A roughly 1% foreign exchange headwind is factored into that outlook.

• Management expects full-year 2026 operating income to exceed 2025 levels overall.
• Headcount fell 1% year-over-year to 75,472, reflecting May 2026 workforce reductions.
• The company continues facing youth-related legal trials scheduled throughout the remainder of 2026.

This guidance suggests Meta still expects healthy top-line momentum despite near-term margin pressure. Investors will be watching closely whether AI monetization can catch up with this aggressive spending pace.

How This Compares To Meta’s Recent Earnings History

Meta’s first-quarter 2026 report set an unusually high bar, with revenue up 33% to $56.3 billion. That quarter’s EPS of $10.44 included an $8.03 billion one-time tax benefit. Shares still fell 8.55% that day despite the seemingly strong headline numbers.

• Q2’s 7.45% after-hours decline follows this same pattern of earnings-related volatility.
• Meta’s market capitalization stands near $1.48 trillion following Wednesday’s after-hours move.
• Return on equity remains strong at 33% over the trailing twelve months.

This recurring pattern shows investors consistently prioritizing margin trends over headline revenue growth this year. Meta’s ability to demonstrate AI return-on-investment will likely remain the central story through year-end.

Final Thoughts

Meta’s second-quarter results confirm a genuine tension between strong advertising execution and ballooning AI infrastructure costs. The 27% constant-currency ad revenue growth remains impressive, but rising expenses clearly spooked investors this week. 

Analysts will now focus on whether raised capex guidance eventually translates into meaningful AI-driven revenue gains. With free cash flow squeezed and margins compressing, Meta faces a pivotal stretch proving its AI investment thesis through the rest of 2026.

Disclaimer:

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