- Meta reported $60.8 billion in second quarter revenue, up 28% annually, slightly outpacing the $60.29 billion analysts projected.
- The tech company’s earnings per share were $6.18, below analyst expectations of $7.22 a share.
- Meta shares fell as much as 12%.
Meta shares were already down after the social media giant posted its second-quarter results. But after CEO Mark Zuckerberg and CFO Susan Li jumped on a conference call with analysts and began dodging questions about the prospects of their hefty AI investments, the stock price continued to sink further.
The first question posed to the executives asked which of the company’s investment opportunities would scale first. Zuckerberg could not offer a specific example, rather stated that he expects “meaningful growth in all areas.”
Meta’s stock declined to as low as 12% as the executives spoke.
Those questions came after the company posted second-quarter net income that fell 14%, with per-share earnings missing expectations. The disappointing results come amid the company pouring billions of dollars into AI investment. As Google saw with its own results last week, Wall Street is starting to scrutinize these hefty investments.
Zuckerberg, for his part, acknowledged the risk in investing in AI tools and LLM-powered agents but believed the investment was worth it.
“I get that this is sort of a big bet across the industry,” Zuckerberg told analysts on the call. “My personal bet is that the people who invest in this are going to be rewarded and feel very good over time.”
Li added that Meta sees intense demand for its services. The chief financial officer stated that the tech giant has “numerous ROI-positive places” to put compute today and expect to be demand-constrained “for the foreseeable future.”
Meta reported a 14% decrease in net income in its second quarter earnings, but the tech company reported an increase in revenue overall with $60.8 billion for the second quarter, up 28% annually. The figure slightly outpaced the $60.29 billion estimate analysts had projected.
Meta’s earnings per share were $6.18, below analyst expectations of $7.22 a share. The company’s stock price was down as much as 12% Wednesday, falling to $583 per share ahead of the second quarter earnings report.
Daily active users on the platform increased 3% year over year to 3.6 billion. Instagram reached 2 billion daily active users, and Threads crossed 500 million monthly active users, according to founder and CEO Mark Zuckerberg, making it the fastest-growing conversation app ever.
The company forecasted that third quarter 2026 total revenue to be in the range of $61-64 billion. Meta also narrowed its capital expenditure on the low end from $125 billion to $130-$145 billion 2026 capital expenditures to account for AI spending.
“AI is accelerating our core business today, powering our next generation of products, and opening the door to entirely new enterprise opportunities,” said Zuckerberg. “The results are already showing, and I’m optimistic about the potential ahead.”
Doubling down on Muse Image AI
Though Meta has heavily invested in its AI offerings, it suffered a public black eye earlier this month when it removed its Muse Image AI feature from Instagram just three days after its unveiling. The decision came after a wave of backlash from the social media platform’s users, as well as public entities like CAA and SAG-AFTRA.
A spokesperson for Meta at the time said they heard the feedback that Muse Image “missed the mark.” Zuckerberg, however, stated that the company’s AI investments are “paying off” on the earnings call.
“Our new Muse Image and Muse Video models will also dramatically expand the universe of content that people can discover across our platforms,” Zuckerberg said. “We’re rolling out new end-to-end creative solutions that help advertisers translate performance data into their their creative decisions. Muse Image is going to supercharge this. The model can analyze images, improve its own work, and produce better ad variations based on advertiser input.”
Legal battles could result in ‘material loss’
The company noted that its third quarter earnings report will incorporate the $2.4 billion charges related to legal proceedings recognized in the second quarter, bumping up the company’s total expenses to the $165-169 billion range.
“We continue to see scrutiny on youth-related issues in several markets and have a number of youth-related trials scheduled for this year in the U.S. which may ultimately result in a material loss,” Li said.
Meta avoided a jury trial last week after a Florida teenager dropped his lawsuit accusing the Facebook and Instagram parent company of contributing to his depression, anxiety and social media addiction.
This year alone the tech company has had to pay out millions in settlements. A New Mexico jury ordered Meta to pay $375 million in a child safety case. Separately a Los Angeles jury ordered Meta and YouTube to pay the plaintiff $3 million in compensatory damages and $6 million in punitive damages, with Meta responsible for 70% and YouTube 30%.
The company also facing a growing number of bans around the world, from Australia to the U.K. Last week, France approved its ban on social media for children under 15.
