Meta Revenue Beats, But AI Spending Crushes Profit Margins: Will the Stock Surge?

Meta Q2 earnings beat Wall Street on revenue but missed on profit, as AI infrastructure spending, legal charges, and severance costs pushed the operating margin down to 31% from 43%.

Shares fell 5.06% to $556 in after-hours trading on Wednesday, according to Benzinga, as investors weighed a higher capital spending outlook against shrinking free cash flow.

Meta Q2 Earnings Beat Hides a Margin Squeeze Revenue reached $60.80 billion, up 28% year over year and ahead of the roughly $59.50 billion analysts expected. Diluted earnings landed at $6.18 per share, down 13% from $7.14. Costs told the other half of the story.

Total expenses jumped 55% to $42.03 billion, including $2.40 billion in legal charges and $1.18 billion in severance tied to a May headcount reduction. Operating income fell 8% to $18.78 billion.