Meta $META drops nearly 9% as free cash flow falls to $784M
Original: Meta Reports Second Quarter 2026 Results View original →
$784M of free cash flow is the number behind Meta $META’s near-9% post-earnings stock decline. Meta’s Q2 2026 earnings release showed revenue of $60.80B, up 28%, but capital expenditures of $31.08B absorbed most of the $31.86B in operating cash flow.
The operating business still grew quickly. Family daily active people averaged 3.60B in June, ad impressions rose 14%, and average price per ad increased 12%. The market reaction came from the cost side: total costs and expenses rose 55% to $42.03B, including $2.40B of legal-proceeding charges and $1.18B of severance expenses tied to the May 2026 headcount reduction.
| Metric | Q2 2026 | Change / context |
|---|---|---|
| Revenue | $60.80B | +28% |
| Total costs and expenses | $42.03B | +55% |
| Capital expenditures | $31.08B | AI infrastructure load |
| Free cash flow | $784M | Down from $8.55B year earlier |
Guidance kept the same tension in place. Meta expects Q3 revenue of $61B-$64B and now sees 2026 total expenses of $165B-$169B. Capital expenditures, including principal payments on finance leases, are expected at $130B-$145B, narrowed from the prior $125B-$145B range.
The finance question is whether advertising growth can fund the AI infrastructure cycle without compressing free cash flow further. The next checkpoint is Q3 revenue versus the $61B-$64B range and any change to the $130B-$145B capex plan. Until those numbers move, investors are likely to treat AI capacity spending as the valuation variable.
Not investment advice. Verify all figures with primary sources before acting.
Related Articles
Microsoft reported Q4 revenue of $90.0B, up 18%, and Azure revenue growth of 43%. The stock moved about 8%-9% higher after hours as cloud revenue and remaining performance obligation beat the AI spending concern.
IBM fell more than 20% after preliminary Q2 revenue of $17.2B and adjusted EPS of $2.93 missed FactSet expectations for $17.86B and $3.01. The warning makes the July 22 earnings call the next test for software, infrastructure, and AI spending exposure.
ASML reported Q2 net sales of €9.3B, a 54.0% gross margin and €2.9B net income, then raised its 2026 sales outlook to €43B-€45B. CNBC’s market feed showed the stock up about 3% after the release, making the beat-and-raise the clearest semiconductor earnings catalyst of the session.