Meta Q2 2026 Earnings Preview: Can AI Ads Justify Rising Spending?

Key Takeaways

• Meta will release its second-quarter 2026 results after the US market closes on Wednesday, July 29.
• Wall Street expects revenue of approximately $60.23 billion and earnings of $7.19 per share.
• Advertising growth remains strong, but Meta’s $125 billion–$145 billion capital expenditure outlook could determine how its stock reacts.

Meta Earnings Arrive as Investors Question AI Spending

Meta Platforms is preparing to report its second-quarter 2026 earnings at a critical point for the artificial intelligence investment cycle. The Facebook and Instagram owner is expected to publish its results after the US market closes on Wednesday, July 29, followed by a conference call at 4:30 p.m. ET.

That places the conference call at 4:30 a.m. Singapore time on Thursday, July 30. The earnings release, financial tables and presentation will be available through the Meta Investor Relations website.

The report comes as investors become increasingly selective about the enormous amounts of money large technology companies are spending on data centres, AI chips and computing capacity. Strong revenue growth may no longer be enough to support a technology stock if management also announces another significant increase in capital expenditure.

Meta shares closed at $593.87 on July 27, falling 0.22% during the session after trading as high as $611.26. The stock is down approximately 10% since the beginning of 2026, reflecting concerns that rising AI investment could place additional pressure on margins and free cash flow.

Options pricing suggests traders expect Meta stock to move by as much as 7% in either direction following the results. Based on Monday’s closing price, that would imply a potential range from below $552 to above $636 by the end of the week.

Wall Street Expects Revenue Growth to Remain Strong

Visible Alpha estimates indicate that Meta could report second-quarter revenue of approximately $60.23 billion, representing growth of about 27% from the $47.52 billion recorded in the same quarter last year.

The estimate is near the upper end of Meta’s official revenue guidance of $58 billion to $61 billion. Management previously said foreign exchange movements were expected to provide an approximately two-percentage-point tailwind to year-over-year revenue growth.

Analysts expect earnings of around $7.19 per share, compared with $7.14 per share in Q2 2025. The relatively modest expected increase in earnings, despite much faster revenue growth, highlights the effect of higher infrastructure, research and employee compensation costs.

Different data providers have slightly different forecasts. Refinitiv’s consensus stands at approximately $60.16 billion in revenue and $7.23 in earnings per share. Both forecasts nevertheless point to the same central question: whether Meta can maintain rapid advertising growth without allowing its AI investment programme to reduce profitability too sharply.

AI-Powered Advertising Remains Meta’s Main Growth Engine

Meta entered the second quarter with strong momentum across its core advertising business. First-quarter revenue increased 33% year over year to $56.31 billion, while advertising revenue reached $55.02 billion.

Ad impressions delivered across Facebook, Instagram, Messenger and other Meta platforms rose 19%, while the average price per advertisement increased 12%. Daily family active people reached 3.56 billion, representing growth of 4% from the previous year.

These figures showed that Meta was benefiting from both higher advertising volume and stronger pricing. AI-powered recommendation systems have helped the company show users more relevant content, while automated advertising products aim to improve campaign targeting, creative production and conversion rates.

The Q2 report will indicate whether these improvements continued during the April-to-June period. Investors are likely to pay particular attention to ad impressions, average ad prices, user engagement and management’s comments about demand from large advertisers and smaller businesses.

If Meta reports revenue near or above the top of its guidance range, it would suggest that AI investment is already supporting the company’s existing advertising model. However, slower ad pricing or engagement growth could raise doubts about whether the benefits are keeping pace with spending.

Meta’s AI Capital Expenditure Could Overshadow an Earnings Beat

Meta increased its 2026 capital expenditure forecast after its first-quarter results. The company now expects to spend between $125 billion and $145 billion, up from its previous estimate of $115 billion to $135 billion.

Management attributed the increase primarily to higher component prices and additional data-centre costs needed to support future computing capacity. Meta spent $19.84 billion on capital expenditure and finance lease payments during the first quarter alone.

The investment contributed to free cash flow of $12.39 billion, compared with operating cash flow of $32.23 billion. Meta has kept its full-year expense forecast unchanged at between $162 billion and $169 billion and continues to expect 2026 operating income to exceed its 2025 level, according to its official Q1 results.

Nevertheless, the market’s response to other technology earnings has demonstrated that investors are sensitive to further spending increases. Meta shares could come under pressure even if revenue beats expectations should the company raise its capital expenditure range or signal materially higher spending in 2027.

Management may also face questions about reports that Meta is considering selling excess AI computing capacity to other companies. Such an initiative could create an additional revenue stream and improve utilisation of infrastructure that is not immediately required for Meta’s internal workloads. Investors will want more detail before treating it as a meaningful offset to the company’s spending.

Margins and Q3 Guidance Could Determine the Stock Reaction

Meta maintained an operating margin of 41% in the first quarter, even as total costs and expenses increased 35% to $33.44 billion. Operating income rose 30% to $22.87 billion.

The company reported diluted earnings of $10.44 per share, but that figure included an $8.03 billion income-tax benefit. Excluding the benefit, diluted earnings would have been approximately $7.31 per share. This makes the underlying earnings trend more useful than a direct comparison with the headline Q1 figure.

For Q2, investors will be watching whether Meta can keep its operating margin near 40% while funding its AI infrastructure programme. A declining margin accompanied by higher capital expenditure could reinforce concerns that the company’s spending is growing faster than its near-term returns.

Third-quarter guidance may be just as important as the reported Q2 figures. Bank of America has estimated that Meta could issue a Q3 revenue outlook of between $60.5 billion and $63.5 billion, equivalent to growth of approximately 18% to 24% from the previous year.

Guidance near or above that range could show that advertising momentum remains healthy. A weaker forecast may shift attention towards slowing growth, particularly if it is paired with higher expenses.

Reality Labs Remains a Costly Long-Term Project

Reality Labs is unlikely to drive Meta’s headline revenue result, but its operating losses remain relevant to the company’s overall spending outlook.

During the first quarter, Reality Labs generated $402 million in revenue, slightly below the $412 million reported a year earlier. Its operating loss narrowed to $4.03 billion from $4.21 billion.

The division includes Meta’s virtual reality products, augmented reality research and smart-glasses initiatives. Although AI-enabled glasses could eventually create a larger consumer hardware business, Reality Labs currently depends on profits from Meta’s Family of Apps segment to fund its development.

Investors will therefore look for signs that quarterly losses are stabilising and for evidence that Meta is directing more resources towards products with clearer commercial potential.

What Could Move Meta Stock After Earnings?

A positive stock reaction would likely require a combination of revenue at or above the top of Meta’s $58 billion–$61 billion guidance, continued strength in advertising metrics, resilient operating margins and a solid third-quarter outlook. Keeping the current capital expenditure range unchanged could also reassure investors.

A negative reaction could follow another capex increase, weaker-than-expected ad pricing, margin compression or cautious Q3 guidance. Even a conventional earnings beat may not be sufficient if management signals that AI spending will rise much faster in 2027.

Wall Street sentiment remains broadly positive. Sixteen of the 17 analysts tracked by Visible Alpha rate Meta stock as a buy, with an average 12-month price target of approximately $835. However, the options market’s expected 7% move shows that traders see considerable short-term uncertainty around the report.

Meta’s Q2 earnings will ultimately test whether its core advertising business is expanding quickly enough to support one of the technology sector’s largest AI investment programmes. The reported numbers will matter, but capital spending, margins and forward guidance are likely to determine the direction of META stock after July 29.