Meta Stock Drops 3% as AI Spending Sends Free Cash Flow Into a Nosedive
TLDR
- Meta Q2 revenue rose 28% year-over-year to $60.8 billion, with ad revenue up 27%
- Q2 capex hit $31.1 billion, sending free cash flow down 91% to just $784 million
- Meta expects to spend $130 billion to $145 billion on capex in full-year 2026
- EPS of $6.18 missed the $7.19 consensus estimate; Q2 costs rose 55%
- Wall Street holds a โModerate Buyโ consensus with an average price target of $785.32
META stock opened at $568.97 on Tuesday, down around 3.5% on the day, and sits well below its 52-week high of $790.80.
Q2 revenue came in at $60.8 billion, up 28% year-over-year, beating analyst expectations of $60.22 billion. Advertising revenue drove most of that, rising 27%, as ad impressions grew 14% and the average price per ad climbed 12%.
Daily active users across Metaโs family of apps reached 3.6 billion in Q2. That gives its ad targeting systems a massive pool of users to work with.
But the earnings picture was not clean. EPS came in at $6.18, missing the consensus estimate of $7.19 by a dollar. Costs jumped 55% in the quarter, nearly twice the rate of revenue growth, which pushed operating margin down from 43% to 31%.
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