Meta Platforms shares fell sharply in after-hours trading, dropping 8.6% to $535, after the company reported second-quarter 2026 results that disappointed on profit and outlook.
While quarterly revenue came in at $60.8 billion, narrowly exceeding consensus, diluted earnings per share were $6.18 - roughly 14% below the $7.22 estimate and representing a 13% decline year over year. Management cited a combination of one-time and structural costs behind the miss, including $2.4 billion in legal charges, severance expenses tied to the May 2026 headcount reduction, and an exceptionally large $31 billion of capital expenditures in the quarter.
The reaction intensified after Meta provided forward guidance that failed to meet analysts' expectations. For the third quarter of 2026, the company guided to a revenue midpoint of $62.5 billion, underperforming the roughly $63.15 billion consensus. At the same time, Meta lifted its full-year total expense projection to a range of $165 billion to $169 billion.
Those developments were reflected in a sharp deterioration in operating profitability. Operating margin for the quarter contracted to 31%, down from 43% in the same period a year earlier, signaling that expenses are rising markedly faster than revenue.
Market backdrop and investor sentiment
The earnings release arrived with investors already on edge. Shares had declined for nine consecutive sessions amid concern over Meta's planned $125 billion to $145 billion in full-year AI infrastructure spending. The combination of the headline EPS miss, worsening free cash flow, margin compression, and below-consensus guidance crystallized fears that the aggressive AI buildout is pressuring near-term profitability faster than revenue gains can compensate.
Macro and geopolitical factors contributed to the broader risk-off tone. The Federal Reserve kept its benchmark rate in the 3.50% to 3.75% range but recorded three dissenting votes in favor of a rate increase, introducing additional uncertainty into monetary policy expectations. At the same time, oil prices moved sharply higher amid tensions in the Middle East, further souring risk appetite across equities and applying added pressure on the technology sector.
The stock's after-hours level moved toward its 52-week low of $520.26 as investors digested the results and guidance.
Summary and implications
In short, Meta's Q2 2026 report combined an earnings shortfall, elevated one-time and ongoing charges, heavy capital spending, and higher expense guidance - all of which weighed on margins and investor confidence. The report reinforced market concern that the company's large-scale AI investment program is amplifying near-term cost pressures relative to revenue benefits.
Note: This article reflects only the information disclosed in Meta Platforms' Q2 2026 report and the related market context as presented.