- Meta announced its financial report for the second quarter of 2026, with quarterly revenue reaching $60.8 billion, a 28% increase year-on-year, surpassing the market expectation of $60.17 billion. However, due to continued heavy investment in the AI sector and one-time expenses, net profit fell by 14% year-on-year to $15.85 billion, with earnings per share at $6.18, below the expected $7.22.
- Due to high capital expenditures leading to a significant reduction in cash reserves, coupled with third-quarter revenue guidance falling short of expectations, market concerns about the return on investment in AI by tech giants have intensified again. The company's stock price plummeted sharply after the market opened on Thursday, with intraday losses exceeding 9% at one point.
- Although the core advertising business performed strongly and reached a new high, massive data center construction and R&D expenses significantly suppressed free cash flow performance. If the pace of AI commercialization does not meet expectations, the valuation of high-tech heavyweight stocks may face the risk of a phased revaluation.
Revenue Exceeds Expectations but Profit Under Pressure
Meta (META.US) achieved $60.8 billion in operating revenue in the second quarter, demonstrating the resilience of its core advertising business and improved advertising monetization efficiency. However, net profit for the quarter fell to $15.85 billion, with diluted earnings per share of $6.18, significantly below the market expectation of $7.22. The pressure on the profit side indicates that the robust growth of the advertising business has been eroded by high operating costs, prompting the market to reassess the company's short-term profit quality.
Surge in AI Capital Expenditure Drags Down Free Cash Flow
To build the next-generation AI infrastructure, Meta significantly increased its investment in data centers and computing resources, leading to a notable reduction in cash reserves for the period. This high-intensity capital expenditure not only suppressed free cash flow performance but also raised investor doubts about the capital allocation strategy of large tech stocks. The market is highly sensitive to the risk of deteriorating free cash flow for leading tech companies before AI profitability is realized.
Weak Performance Guidance Triggers Valuation Repricing
The company's revenue outlook for subsequent quarters failed to meet Wall Street's high expectations, further exacerbating the decline in risk appetite in the capital market. On Thursday, Meta's stock price plummeted by more than 9%, exerting downward pressure on the US tech sector. If the macro liquidity environment tightens or the AI investment return cycle lengthens in the future, high-valuation tech stocks may face widespread valuation revaluation pressure.
Core Advertising Stability and Divergence in New Business Investment
Despite strong demand for digital advertising, one-time layoff restructuring expenses and legal litigation costs, combined with AI investment, have narrowed the overall operating profit margin. Compared to giants in the same sector, the divergence within the tech sector is becoming increasingly apparent. Capital flows are shifting from purely relying on macro recovery advertising concepts to safe-haven targets with clear cash flow returns and cost control capabilities.
