Meta Platforms will report second-quarter results after markets close Wednesday, and recent history tells us Wall Street will only care about one number: Its capital expenditures.
Meta will likely deliver a record quarter for its core advertising business. But what CEO Mark Zuckerberg has to say about the company's massive and, at times, confusing artificial-intelligence buildout will dictate where shares go next.
"At this point, it feels like capex guidance matters more than the actual earnings prints," Mizuho's Daniel O'Regan wrote earlier this week.
Meta stock enters Wednesday in need of a jolt, having tumbled 10% this year after a below-market 13% gain in 2025.
The ad business keeps chugging along. Analysts expect second-quarter revenue to rise 27% year over year to $60.2 billion -- marking a record high. But costs are also up, with Wall Street forecasting earnings of $7.19 a share, narrowly above $7.14 a year ago. Operating margins are expected to fall to 36% from 43%.
If Alphabet's earnings are any indication, those numbers will play second fiddle to capex. The Google parent had a blowout earnings report last Wednesday, but the stock tumbled when management added another $15 billion to its 2026 capex estimates.
Meta has forecast $125 billion to $145 billion in capex this year, having already raised that guidance range at its last earnings report. And investors will be curious not just whether Zuckerberg lifts the forecast again, but also what he says about Meta's sprawling AI ambitions.
In the last month alone, the company has: Released a new AI model and AI developer platform; reportedly set a goal of doubling compute capacity in 2027; and explored selling excess capacity as part of a new cloud business, according to a report from Bloomberg.
How Zuckerberg plans to monetize Meta's AI models and data-center capacity -- part of an initiative called Meta Compute -- is crucial at a time when investors are laser-focused on return on invested capital, or ROIC.
Confirmation of a cloud business would certainly help: "We see potential for a positive re-rating as Meta Compute could damp ROIC concerns, improve AI monetization optionality, and lead to higher [earnings] revisions," Raymond James analyst Josh Beck wrote in a research note last week.
Given the flurry of recent news, it is even possible Meta breaks its usual policy and offers capex guidance for 2027 on Wednesday rather than waiting until its fourth-quarter call next January, says Dan Salmon, an analyst at New Street Research.
As far as Wall Street is concerned, the more information the better. Meta is expected to report negative free cash flow for the first time as a public company in 2026. That cash flow deficit will likely deepen in 2027.
Investors need to understand more clearly how Zuckerberg plans to turn that number back into a positive -- and then grow it -- as we approach 2030.
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