Meta's stock tumbled nearly 8% on Wednesday after the company reported second-quarter earnings that fell short of Wall Street forecasts, undoing the impact of CEO Mark Zuckerberg's recent media campaign touting the benefits of artificial intelligence.
Earnings Miss and Spending Increases
Meta posted $6.18 in earnings per share, missing the Bloomberg consensus estimate of $7.14. Revenue reached $60.8bn, slightly above analyst predictions of $60.23bn. The company raised its expected expenses for the year to a range of $165bn to $169bn, up from $162bn to $169bn, citing $2.4bn in charges related to legal proceedings, according to CFO Susan Li. Capital expenditures for 2026 are now projected between $130bn and $145bn, up from $125bn to $145bn, with a significant portion earmarked for AI investments.
Zuckerberg's AI Optimism
In a Wall Street Journal op-ed published Tuesday, Zuckerberg expressed optimism for a world where everyone has access to a super-intelligent machine, using the analogy of a super-intelligent lawyer ensuring fair justice. He reiterated this vision in interviews with the New York Times and Financial Times, advocating for decentralized AI and personalized super-intelligence tailored to individual needs and beliefs. “I think it is literally impossible to have a single benevolent super-intelligence that is simultaneously aligned with everyone at once,” he told the New York Times.
However, his message failed to alleviate investor concerns about Meta's massive spending on AI infrastructure, which has contributed to a 10% year-over-year decline in the company's share price. The stock market's reaction to his remarks on the earnings call later Wednesday could indicate whether his messaging is sufficient to ease those worries.
Struggles and Lawsuits
Meta has struggled to develop an AI model rivaling OpenAI or Anthropic, but Bloomberg reported this month that it plans to launch a cloud business to sell AI compute, monetizing its AI investments. The report briefly boosted investor confidence.
Mike Proulx, vice-president and research director at Forrester Research, said Meta may be “trying to do too much at once,” noting that every growth lane carries a trust toll, including AI-generated advertising, smart glasses, youth safety, and employee-tracking initiatives.
Zuckerberg's narrative aims to differentiate Meta from competitors whom he accuses of spreading doom about AI. “I don’t understand why anyone who believes that AI will eliminate most jobs and much of humanity’s relevance would rush to build that future,” he wrote in the WSJ.
But eMarketer senior analyst Minda Smiley said the positive tone may fall flat given the negative sentiment toward social media companies over claims of harming children. “This juxtaposition could make it more difficult for Meta to build credibility in an area where it’s already a laggard,” she said.
Meta faces about 3,000 lawsuits alleging it deliberately creates addictive products harming children. Forty-two states have sued in state courts, with Tennessee's case at trial, and a separate federal suit by 29 attorneys general goes to trial in California next month. The lawsuits carry financial costs, with juries already finding Meta liable and awarding millions in damages. Lawyers for plaintiffs say they will continue seeking high-cost damages until Meta changes its product design.
