Meta's net profit in the second quarter declined, free cash flow sharply decreased, and the performance guidance fell short of expectations, causing the stock price to drop in after-hours trading

On July 29 local time, American tech giant Meta released its Q2 earnings report for the fiscal year 2026. Due to a significant reduction in free cash flow caused by a surge in capital expenditures in the artificial intelligence sector, as well as revenue guidance for the next quarter falling below market expectations, Meta's stock price experienced a noticeable decline in after-hours trading.

The financial report showed that Meta achieved operating revenue of $60.8 billion in Q2; net profit decreased from $18.34 billion in the same period last year to $15.85 billion; earnings per share were $6.18, lower than the market expectation of $7.22. Affected by high-intensity investments in AI infrastructure, the company's free cash flow for the quarter plummeted from $8.55 billion in the same period last year to $784 million. Total costs and expenses for the quarter reached $42.03 billion, a year-on-year increase of 55%, which included $2.4 billion in legal litigation expenses and $1.18 billion in layoff restructuring costs. Meta's Chief Financial Officer Susan Li pointed out that excluding the aforementioned one-time expenses, operating profit for the quarter increased by 9% year-on-year.

To support the implementation of its AI strategy, Meta continues to expand its computing infrastructure, adjusting its expected capital expenditure range for the entire year of 2026 to between $130 billion and $145 billion. The company has recently been intensively advancing several large infrastructure projects, including a $14 billion data center in El Paso, Texas, in collaboration with BlackRock, planning to invest over $50 billion in the Hyperion data center in Louisiana, and investing $9 billion in a data center in Alberta, Canada. Meta's CEO Mark Zuckerberg stated that the company's computing resources will focus on large model training, core business expansion, and personal intelligent agent development, while also exploring new commercialization paths by renting computing power to large enterprise clients.

In terms of business and user data, the daily active users of the Meta app family reached 3.6 billion, slightly below the market expectation of 3.61 billion. The department responsible for virtual reality and AI hardware achieved revenue of $431 million for the quarter, with an operating loss of $4.6 billion.

Regarding performance guidance, Meta expects Q3 operating revenue to be between $61 billion and $64 billion, with the expected midpoint of $62.5 billion being lower than the average analyst estimate of $63.15 billion. The company noted that exchange rate factors are expected to have a negative impact of about 1 percentage point on the year-on-year growth rate of total revenue for the next quarter