The news: Meta may have had strong ad revenue growth in Q2, but its lower-than-expected earnings per share, user growth, and a big hit to its coffers may indicate its heavy AI infrastructure investments are catching up with it.

By the numbers:

• Total revenues: $60.8 billion, +28% YoY
• Ad revenues: $59.4 billion, +27% YoY
• Earnings per share: $6.18, +13% YoY but below expectations of $7.22
• Free cash flow: $784 million, -90% YoY
• Family daily active people: 3.6 billion, +3% YoY, but below expectations of 3.61 billion
• Costs and expenses: $42.03 billion, +55% YoY—Meta narrowed its 2026 guidance to now fall between $130 billion and $145 billion, above the previous minimum of $125 billion

Why it matters: Given Meta’s outsized role in the digital advertising ecosystem—its 2026 US net digital ad revenues will surpass $101 billion and edge out Alphabet, per our forecast—investors are concerned its AI spending is overtaking its ad business growth.