Meta released Q2 2026 earnings after market close on July 29, missing profit expectations despite revenue gains. The company posted $60.8 billion in revenue, up 28% year-over-year, but reported earnings per share of $6.18, short of the $7.18 analyst consensus.

The stock sank in after-hours trading on the earnings miss and disappointing forward guidance. Meta guided for Q3 revenue between $61 billion and $64 billion, below the $63.15 billion analyst consensus estimate.

AI Ads Monetization Challenge

Meta faces a critical question: can the company actually make money from generative AI? The company has bet billions on AI models to improve ad targeting and recommendations, but investors want evidence that these investments are translating into higher prices advertisers will pay per ad impression.

The company saw average price per ad increase 12% year-over-year in Q2, a solid gain but not enough to offset concerns about slowing growth. Ad impressions delivered across Meta’s family of apps increased 14% year-over-year, suggesting user growth remains solid but monetization per user is plateauing.

Capital Expenditure Worries

Meta’s capital expenditures reached $31.08 billion in Q2, and the company is expected to spend roughly $40 billion in infrastructure this year. Free cash flow tumbled to just $784 million, raising questions about whether aggressive infrastructure spending is choking the company’s ability to return cash to shareholders.

CEO Mark Zuckerberg has emphasized that data center buildout is essential for generative AI research and future AI product launches, but investors are demanding faster evidence that these investments will pay off in higher revenue and profit.

Daily Active Users Still Growing

Family daily active people averaged 3.60 billion in June 2026, up 3% year-over-year. This massive user base remains Meta’s most valuable asset. The challenge is monetizing growth in markets where advertising market maturity has plateaued and competition from TikTok and YouTube continues to fragment user attention.

Meta’s stock decline after earnings adds pressure on the company to demonstrate concrete monetization paths for AI investments.