Meta's profits fell in the second quarter, and Mark Zuckerberg reiterated the commitment to increase investment in artificial intelligence

On July 29, Meta released its Q2 2026 financial report. Affected by high expenditures on artificial intelligence (AI) infrastructure, the company's profits and free cash flow significantly shrank during the quarter. Meta's CEO Mark Zuckerberg reiterated that the company will maintain a capital expenditure cap of up to $145 billion for 2026, continuing to increase investments in the AI field.

The financial report showed that Meta's total revenue grew by 28% in Q2, with the daily active users of its app matrix reaching 3.6 billion, and digital advertising impressions and prices both achieving double-digit growth. However, due to being in a super cycle of capital expenditure, the company's total costs surged by 55% during the quarter, with R&D expenses skyrocketing by 68%. As a result, the company's operating profit in Q2 fell by 8% year-on-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, while cash and cash equivalents reserves shrank by 57%, and no stock buybacks were conducted in the first half of this year.

In terms of financial guidance, Meta raised the lower limit of its 2026 capital expenditure expectation from $125 billion to $130 billion, while keeping the upper limit unchanged at $145 billion. Regarding the high costs of AI investments, Zuckerberg pointed out that the related technology investments are improving user experience and effectively enhancing the performance of the digital advertising business. He emphasized that, given the current tight supply of computing power in the industry, Meta has received numerous premium offers from external parties to purchase its surplus computing capacity, allowing the company to achieve rapid revenue generation by selling computing resources to third-party clients.

Due to the Q3 revenue guidance falling short of market expectations, coupled with concerns in the capital markets about the sustainability of continued massive expenditures, Meta's stock price fell by 10% in after-hours trading following the release of the financial report. Analysts expect that Meta may face financial pressure with negative free cash flow in 2026 and 2027, and the actual return rate of its AI commercialization will become a core indicator determining the company's future market performance