Meta reports Q2 revenue up 28% to $60.8B; META drops 8% after hours
Meta beat on Q2 revenue but guided below estimates for Q3, while free cash flow collapsed 91% and capex rose to as much as $145B.
In Brief
- Meta Q2 revenue rose 28% YoY to $60.8B.
- Free cash flow fell to $784M, down 91% YoY, and capex guidance increased.
- META dropped more than 8% in after-hours trading.
See related coverage. Meta Platforms reported second-quarter revenue of $60.8 billion, up 28% year over year, but the stock fell more than 8% after hours because the company forecast third-quarter revenue below estimates. The results highlight Meta’s tension between strong advertising growth and soaring capital spending on AI infrastructure.
Also see recent reporting. Family daily active people reached 3.6 billion on average for June, up 3% year over year, while the company disclosed that free cash flow collapsed to $784 million in the quarter, down 91% from the same period last year. Meta also raised its 2026 capex guidance to $130 billion–$145 billion, up from a prior range of $125 billion–$145 billion.
Source: original report. Reality Labs posted $431 million in revenue, up 16% year over year and slightly above estimates of $423.4 million, but the division still lost $4.62 billion in operating income, compared with an estimated $5.07 billion loss. Meta also recorded $2.4 billion in legal-related charges and $1.18 billion in severance from the May 2026 layoffs of roughly 8,000 employees.
What Meta Q2 earnings say about AI spending
The biggest pressure point is capital allocation. Meta’s capex increase reflects aggressive investment in data centers and AI hardware, even as investors punished the stock for weaker-than-expected Q3 guidance. Revenue growth alone is no longer enough to offset concerns about cash burn, especially with free cash flow down 91%.
Analysts also pointed to Reality Labs as a persistent drag. While the division showed a modest revenue beat, its operating losses remain well above $4 billion per quarter, and Meta’s legal and severance costs added further pressure. The message from the market is clear: profitability at scale still depends on taming infrastructure costs.
Advertising remains Meta’s engine, with family DAP and revenue growth both positive. The watchlist for the next quarter is whether Meta can improve monetization across newer AI-driven ad products without repeating the capex-led margin compression that spooked shareholders this time.
What to watch in Meta’s next quarter
Meta’s updated capex range and the gap between Q2 results and Q3 guidance will dominate the near-term conversation. If data-center and compute costs keep climbing while ad revenue growth slows, margin pressure could intensify.
Investors should also monitor Reality Labs trajectory, legal settlements, and management commentary on AI infrastructure ROI. The stock reaction suggests the market is recalibrating expectations for a company that is spending heavily while operating two major strategic bets.
For now, Meta’s earnings present a mixed picture: stronger-than-expected revenue, weaker-than-hoped guidance, and a capital program that is increasingly expensive to maintain.
FAQ
Why did Meta stock fall after beating on revenue?
Because Q3 guidance came in below estimates and capex rose.
What happened to Reality Labs in Q2?
Revenue rose to $431M but the division still lost $4.62B.
How much did Meta’s free cash flow drop?
Free cash flow fell to $784M, down 91% year over year.
