Meta Platforms (NASDAQ:META) shares fell nearly 7% in Wednesday's after-hours trading after the social media giant delivered a quarterly report that left investors weighing two very different stories. On one hand, the company's advertising business continued to perform well. On the other, weaker-than-expected earnings, a slightly softer outlook, and continued increases in AI-related spending left many questioning how long it will take for those investments to translate into stronger profits

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Meta reported Q2 GAAP earnings of $6.18 per share, missing consensus by $1.04, while revenue climbed 27.9% year over year to $60.8 billion, beating expectations by $510 million. Family Daily Active People rose 3% to 3.60 billion, ad impressions increased 14%, and the average price per ad climbed 12%. Looking ahead, the company expects third-quarter revenue of $61 billion to $64 billion, while also raising the lower end of its full-year expense outlook. The company said the increase primarily reflects the recognition of $2.4 billion in legal charges. At the same time, Meta narrowed its 2026 capital expenditure (CapEx) forecast to $130 billion-$145 billion from the prior range of $125 billion-$145 billion.

One investor, known by the pseudonym Agar Capital, believes the market is placing too much weight on the weaker parts of the report while overlooking the health of the underlying business.

Agar compares selling Meta after these results to "selling an airport while they are expanding the terminal," arguing that investors are focusing on temporary disruption instead of asking whether the business itself continues to perform well. The investor also points out that "the market is no longer accustomed to seeing anything out of place; it wants and demands perfection," making any disappointment appear much worse than it really is.

From Agar's perspective, the latest quarter offers little evidence that Meta's advertising franchise is losing momentum. Revenue, ad impressions, and ad pricing all continued moving higher, leading him to conclude that advertisers remain willing to spend more on the company's platforms. While the investor acknowledges that earnings missed expectations and margins declined, he believes those issues have overshadowed what remains a very healthy operating business.

Agar also argues that investors have overreacted to Meta's updated spending plans. "I think the market interpreted a small revision in terms of capex as if Meta suddenly announced a new spending initiative," the investor wrote, adding that elevated AI investment has been well understood for some time. Rather than focusing solely on spending, he advises investors to ask "whether the core business has started to break down." Based on the latest operating results, he does not believe that has happened.

That assessment explains why Agar intends to add to his position following the selloff. "I will buy because, after these results, the gap between the strength of the business and the price assigned by the market has become too wide," he wrote. Looking further ahead, he believes investors are demanding immediate proof that AI investments will generate meaningful returns, while he would rather own the shares "at a point where that proof hasn't yet been completely reflected within today's valuation estimates."

Turning to Wall Street, analysts also remain bullish on Meta. The stock earns a Strong Buy consensus rating based on 41 recent analyst reviews, including 35 Buys and 6 Holds. At $809.81, the average price target implies ~38% upside over the next 12 months. (See META stock forecast)