Meta, the company that owns Facebook and Instagram, reported its financial results for the second quarter of 2026 on July 29. The company earned $6.18 per share, which was much lower than the $7.14 per share that Wall Street analysts had expected. The stock fell nearly 8% in after-hours trading. Revenue, the total amount of money the company brought in, was $60.8 billion, slightly above the $60.23 billion analysts predicted. But the profit miss, partly caused by $2.4 billion in legal costs, ended a streak of six quarters in a row where Meta had beaten expectations (The Guardian; 247 Wall St).

The size of the miss depends on which group of analysts you look at. Bloomberg's tally put expectations at $7.14 per share, while another set tracked by 247 Wall St placed the bar at $7.22, making the $6.18 result a 14.4% shortfall under that measure. Either way, the gap between how much money Meta brought in and how much profit it actually kept is the story of this quarter.

Meta's chief financial officer, Susan Li, said the company took on $2.4 billion in charges related to legal proceedings during the quarter. That goes a long way toward explaining why profits fell short. Meta also spent $1.18 billion on severance, which is money paid to employees when they leave the company as part of layoffs or restructuring. Together, these one-time costs totaled about $3.6 billion, turning what would have been a modest win on revenue into a clear loss on profit (The Guardian; 247 Wall St).

Advertising is still Meta's main way of making money. Ad revenue came in at $59.3 billion, slightly above the $59.07 billion analysts expected (Yahoo Finance). The ad business is still growing and still beating estimates. The problem is on the cost side, and Meta's forecast for future spending did nothing to reassure investors that those pressures will go away.

Meta raised the lower end of its 2026 expense forecast to $165 billion, up from a prior range of $162 billion to $169 billion. More strikingly, Meta raised its 2026 capital expenditure projection to a range of $130 billion to $145 billion, up from a previous low end of $125 billion. Capital expenditure, or capex, is money a company spends on big physical assets like data centers and computer equipment. These are huge amounts of money, directed mostly at building AI infrastructure, and they signal that Meta's spending is going up even as profits come under pressure from legal and restructuring costs (The Guardian).

The earnings report came the day after a carefully planned media push by CEO Mark Zuckerberg. On July 28, he published an op-ed in the Wall Street Journal titled "The AI Future Is for Everyone," and gave interviews to the New York Times and the Financial Times promoting the idea of personalized super-intelligence. Two days earlier, the WSJ had reported that Zuckerberg announced a new Meta unit called "Superintelligence Labs," described as one of the largest AI computing hubs involving power controlled by the U.S. government (WSJ; WSJ; The Guardian).

Bloomberg also reported in July that Meta plans to start a cloud business to sell AI computing power to other companies. Right now, Meta builds AI infrastructure for its own use. This new plan would turn Meta into a seller of that computing power, putting it in competition with big cloud companies like Amazon and Microsoft. That business would depend on the very same massive spending that spooked investors today (The Guardian).

Meta's stock price had already fallen about 10% over the past year before this report came out. The near-8% drop after earnings deepened that decline. The timing stands out: Zuckerberg spent the 48 hours before the earnings call making the case for an AI-driven future, while the financial results showed the near-term cost of building it.

The broader context here is that Meta is dealing with three big challenges at the same time: legal costs, workforce restructuring, and a spending ramp on infrastructure unlike anything it has done before. The $2.4 billion legal charge and $1.18 billion in severance are, in theory, one-time costs. But Meta has faced legal costs repeatedly over the years, and the restructuring suggests the company is still reorganizing itself around AI. Meanwhile, the raised spending floor from $125 billion to $130 billion is a long-term commitment, not a one-time hit, and it will affect every quarter of 2026.

What investors have to decide is whether the ad business, which beat expectations this quarter, can grow fast enough to cover the rising costs. Ad revenue of $59.3 billion against total revenue of $60.8 billion means ads still make up about 97.5% of Meta's income. The cloud computing business and any revenue from super-intelligence products are still speculative or just getting started. Meta is asking the market to fund a massive infrastructure build on the strength of an advertising business that, while solid, is not growing as fast as the spending.

Zuckerberg's media blitz before the earnings call was, in effect, a way to set the narrative around long-term AI ambition before the numbers could speak for themselves. The numbers spoke of shrinking profit margins, legal costs, and a spending curve that keeps going up. The stock's reaction suggests the market heard both messages and, for now, is focused on the costs rather than the vision.

The Q2 2026 earnings call was scheduled for 1:30 PM PST on July 29, with the financial results released after the stock market closed (Meta Investor Relations).