Meta released its second-quarter financial results for 2026 on July 29th. The company's quarterly profit and free cash flow saw a significant decline, driven by high spending on artificial intelligence (AI) infrastructure. Meta CEO Mark Zuckerberg reiterated the company's commitment to maintaining its 2026 capital expenditure ceiling of up to $145 billion, continuing to intensify investments in the AI field.
According to the financial data, Meta's total revenue for the second quarter grew by 28%. The daily active user count across its app ecosystem reached 3.6 billion, while digital ad impressions and pricing both achieved double-digit growth. However, due to being in a capital expenditure super-cycle, the company's total costs surged by 55% in the quarter, with research and development expenses soaring by 68%. As a result, the company's second-quarter operating profit fell 8% year-over-year to $18.8 billion. Free cash flow plummeted from $8.5 billion in the same period of 2025 to $784 million. Additionally, the company's long-term debt rose from $58.7 billion at the end of last year to $83.7 billion, cash and cash equivalents reserves shrank by 57%, and it conducted no share buybacks in the first half of this year.
In terms of financial guidance, Meta raised the lower end of its 2026 capital expenditure forecast from $125 billion to $130 billion, while keeping the upper end unchanged at $145 billion. Addressing the high costs of AI investment, Zuckerberg pointed out that the related technology investments are improving user experience and effectively boosting the performance of the digital advertising business. He emphasized that, given the current tight supply of computing power in the industry, Meta has received a large number of external offers from parties willing to pay a premium to purchase its excess computing capacity. The company could generate rapid revenue by selling computing resources to third-party customers.
As the third-quarter revenue guidance fell short of market expectations, combined with capital market concerns over sustained massive spending, Meta's stock price fell 10% in after-hours trading following the earnings release. Analysts expect that Meta may face negative free cash flow pressure in 2026 and 2027, and the actual return on its AI commercialization will become a core metric determining the company's future market performance.
Comments