Meta Platforms reported second-quarter 2026 revenue of $60.80 billion on July 29, up 28 percent from a year earlier and ahead of Wall Street’s $60.29 billion estimate. Earnings per share came in at $6.18, well below the $7.22 analysts had expected.

The shortfall traced back to a 55 percent jump in total costs and expenses, which reached $42.03 billion. That figure included $2.40 billion in legal charges and $1.18 billion in severance tied to a reduction of about 8,000 jobs, and it pushed operating margin down to 31 percent from 43 percent a year earlier.

Investors reacted quickly. Meta shares closed the regular session down 1.31 percent at $585.61, then fell a further 7.45 percent in after-hours trading to $542.00. The stock’s decline from its pre-earnings level reached 11.45 percent as the market weighed heavier AI infrastructure and staffing costs against the revenue growth.

The bigger swing showed up in cash flow. Meta’s free cash flow collapsed to $784 million for the quarter, down from $8.5 billion a year earlier, a decline of roughly 91 percent, as $31.1 billion in capital expenditure absorbed nearly all of the $31.86 billion in operating cash flow the company generated during the period.

Chief executive Mark Zuckerberg also raised Meta’s full-year capital expenditure guidance to a range of $130 billion to $145 billion, up sharply from the $113 billion to $128 billion range the company had projected back in April, adding roughly $17 billion at the midpoint to an already record infrastructure commitment. “AI is accelerating our core business today, powering our next generation of products, and opening the door to entirely new enterprise opportunities,” Zuckerberg told investors on the earnings call, though he gave no specific timeline for when the spending would pay off.

Meta’s Reality Labs division, which houses its virtual and augmented reality work, posted an operating loss of $4.62 billion for the quarter on revenue of just $431 million, a loss that widened from $4.03 billion in the prior quarter. Revenue there was up 16 percent year over year on stronger sales of Ray-Ban Meta smart glasses, even as Quest headset sales softened. The unit’s cumulative losses since Meta began reporting it separately in late 2020 have now reached roughly $88 billion.

Meta has said it intends to keep investing aggressively in AI infrastructure, talent and product development even as margins come under pressure.