The company said it expects total expenses for 2026 to come to between $165bn and $169bn.
Tech giant Meta’s income and operating margin for the second quarter of 2026 were down in comparison to the same time last year amid significant outgoings for the period.
Although revenues were up 28pc to $60.8bn for the period ending 30 June, the company saw a big jump in costs and expenses from around $27bn in Q2 2025 to more than $42bn this year.
Total income fell from $20.4bn to $18.8bn, with operating margin dropping from 43pc to 31pc. Net income fell year-on-year from $18.3bn to $15.8bn.
The 55pc year-on-year jump in expenses includes a $2.4bn outlay on charges around various legal proceedings and $1.8bn in severance costs invoked from recent layoffs by the company. It said it expects total expenses for 2026 to come to between $165bn and $169bn.
Meta’s free cash flow for the most recent quarter was $784m, compared to more than $8bn a year earlier, following declared spending of more than $31bn on leases, property and equipment.
It said it expects capital expenditures for 2026 to amount to between $130bn and $145bn.
“As AI usage in our products and businesses continues to ramp, we continue to invest aggressively in infrastructure to meet the demand,” said Meta CEO Mark Zuckerberg on the company’s quarterly earnings call yesterday.
“Overall, we expect that a significant portion of our compute is going to go towards training our models, growing our core business, and delivering personal agents and new products. But we also expect to grow a large business serving large customers as well.”
Meta shares were down last night following an announced projected revenue for Q3 of around $62.5bn – lower than analysts’ expectations of more than $63bn, according to media reports.
Commenting on the financial results, analyst Mike Proulx of Forrester said that “Meta believes AI infrastructure is now a strategic asset, but its bill is arriving faster than the payoff,” noting that “what it generated in cash this quarter almost all got eaten by AI infrastructure spending”.
He added: “Meta’s AI spend was easier to celebrate when margins were expanding. It’s harder to celebrate now that the costs are showing up in the numbers.
“There’s a bit of similarity to Meta’s metaverse missteps in that Meta is once again spending ahead of proven product demand. The difference is that AI adoption and value are real.
“Investors now have to decide whether Meta’s growing list of AI initiatives represents company diversification or distraction. What makes that question more complicated is that Meta’s legal and regulatory challenges are getting more expensive, too.”
The company’s reported headcount as of 30 June was put at 75,472, which still includes approximately 8,000 employees who have recently been or will soon be laid off.
CFO Susan Li told the earnings call that the company would “continue to monitor active legal and regulatory matters that could significantly impact our business and financial results”.
She added: “For example, 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 US, which may ultimately result in a material loss.”
Proulx noted: “Meta’s biggest regulatory battles typically centred on privacy and competition. Now the pressure is mounting around youth wellbeing, addiction and platform safety.
“That’s a different kind of risk because it impacts the future audience growth that powers Meta’s ad business that’s literally underwriting the company’s exorbitant AI costs.”
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