Meta reported a 27% year-over-year increase in advertising revenue in the second quarter of 2026, reaching $59.4 billion, and emphasized that its continued investment in artificial intelligence is continuously optimizing advertising campaign performance. In the three months ending June 30, the company's total revenue increased 28% year-over-year to $60.8 billion,according to the financial report. Although revenue exceeded market expectations, earnings fell short of Wall Street targets, and the stock price declined after the earnings release.

The parent company of Facebook and Instagram still faces questions about the rationality of its massive AI spending. The company's third-quarter revenue guidance of $61 billion to $64 billion failed to satisfy investors. Chief Financial Officer Susan Li stated that the company is dealing with the impact of a high comparison base for ad impressions from the same period last year and may face additional headwinds due to European policy changes (allowing reduced personalized advertising).

Executives attempted to alleviate investor concerns by emphasizing Meta's dominant position in the digital advertising sector and how AI is improving monetization efficiency.

"In dollar terms, our advertising business is reporting faster annual revenue growth than any other company's reported advertising business—so these AI investments are paying off," Meta CEO Mark Zuckerberg saidduring the earnings callwith analysts.

Meta's AI-driven advertising product suite, Advantage+, continues to grow, reaching an annualized revenue run rate of $75 billion in the second quarter. The company also launched Meta Generative Recommender this quarter, which Li described as a "paradigm shift" in how ads are delivered on the platform.

"Instead of scoring every possible ad individually, we now use large language models to reason holistically about ad content and user preferences, and predict the best ad for each person," Li explained. "This makes our ad matching smarter and more precise, resulting in compounding performance improvements for advertisers."

Some researchers expect that this social media giantmay surpass Google in advertising revenue for the first time this year. However, Google has a broader range of business drivers, including its thrivingcloud computing division。

Meta made some progress in diversifying beyond advertising in the second quarter. Revenue from "other" categories within its family of apps increased 73% year-over-year to $1 billion, crossing that threshold for the first time, driven by strong demand for WhatsApp paid messaging and subscription services. But for a company of Meta's scale, $1 billion may be just a drop in the bucket, and investors are now more focused on capital expenditures.

In terms of capital expenditures, Meta narrowed its full-year capital expenditure guidance range to $130 billion to $145 billion, compared to the previous expectation of $125 billion to $145 billion, meaning the lower end of the range was raised.

"Meta believes AI infrastructure is now a strategic asset, but the bills are coming faster than the returns. Meta's advertising business remains strong, but everything else costs more," said Mike Proulx, Vice President and Research Director at Forrester, in an email comment. "Revenue beat expectations and user engagement continued to grow, but nearly all the cash generated this quarter was consumed by AI infrastructure spending. Investors must now judge whether Meta's growing number of AI initiatives represent diversification or distraction for the company."