META Q2 Earnings Call Highlights AI Expansion Strategy

Meta Platforms, Inc. META emphasized Artificial Intelligence as the central driver of its next growth phase during its second-quarter 2026 earnings call, with management highlighting AI improvements across advertising, recommendations and new enterprise products.

Executives also outlined aggressive infrastructure investments while maintaining focus on monetizing AI through consumer tools, business agents and enterprise services.

META Advances AI-Powered Core Business

Mark Zuckerberg, founder, chairman & CEO, said AI investments are already improving Meta’s core operations by enhancing user experiences, advertiser performance and internal product development. He highlighted AI-driven recommendation improvements across Instagram and Facebook as a key area of progress.

Susan Li, chief financial officer, noted that Instagram global time spent grew double digits year over year, supported largely by improvements in feed and Reels recommendations. Facebook video time spent also increased year over year, driven by ranking improvements.

The company reported second-quarter revenues of $60.80 billion, up 28% year over year, while EPS was $6.18. Revenues exceeded the Zacks Consensus Estimate of $60.21 billion, while EPS missed the estimate of $7.10, resulting in a 13.00% EPS surprise and a 1.00% revenue surprise.

Meta Platforms, Inc. Price, Consensus and EPS Surprise

Meta Platforms, Inc. price-consensus-eps-surprise-chart | Meta Platforms, Inc. Quote

Meta Expands AI Monetization Opportunities

Meta is developing multiple AI-related revenue channels, including subscriptions, APIs, business agents and potential compute services. Zuckerberg said the company sees enterprise opportunities beyond advertising, including tools that help businesses interact with customers and improve operations.

Management highlighted that more than 1 million businesses were using Meta business agents each week across WhatsApp and Messenger. The company is also expanding business agent capabilities on Instagram.

Li said Family of Apps other revenues reached $1 billion for the first time in a quarter, growing 73% year over year, primarily driven by WhatsApp paid messaging and subscriptions revenues.

META Increases AI Infrastructure Spending

META is continuing to build infrastructure capacity to support AI development and product expansion. The company reported capital expenditures of $31.08 billion in the quarter, reflecting investments in servers, data centers and network infrastructure.

Li said Meta expects 2026 capital expenditures, including principal payments on finance leases, to remain between $130 billion and $145 billion. She added that the company is focused on maximizing capacity through 2026 and 2027 while maintaining flexibility for future decisions.

Management also discussed external funding opportunities, noting that partnerships such as the BlackRock infrastructure venture could complement Meta’s approach to expanding AI capacity.

Meta Faces Higher Costs Amid AI Push

Meta reported total expenses of $42.03 billion in the quarter, up 55% year over year. Management attributed expense growth to employee compensation, infrastructure costs, legal expenses and third-party AI token costs.

Li said second-quarter operating income was $18.8 billion, down 8% year over year, with a 31% operating margin. Excluding legal charges and severance expenses, operating income would have increased 9% year over year.

The company also highlighted ongoing regulatory risks, including youth-related legal matters that could affect future financial results.

META Addresses Analyst Questions on AI Returns

A Morgan Stanley analyst asked about which AI opportunities could scale first and generate measurable returns. Zuckerberg responded that Meta sees potential across core business improvements, consumer products, APIs, business agents and compute monetization rather than relying on a single opportunity.

A Goldman Sachs analyst questioned how Meta would approach enterprise opportunities and capital needs. Zuckerberg described business agents as an extension of Meta’s existing advertiser relationships, while Li emphasized a mix of operating cash flow, debt and partnerships to support infrastructure investment.

A JPMorgan analyst asked about recommendation improvements from larger AI models. Li said Meta expects continued gains through more personalized recommendations, stronger data infrastructure and expanded use of large language models in ranking systems.

Meta Maintains Focus on AI Growth Roadmap

Meta’s management maintained that AI remains the company’s primary strategic priority, with efforts spanning consumer assistants, business agents, advertising improvements and infrastructure expansion.

The company expects third-quarter 2026 revenues of $61 billion to $64 billion and raised the lower end of its full-year expense outlook to $165 billion to $169 billion after incorporating legal charges.

Zacks Signals for META

META carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Rank reflects earnings estimate revisions and is designed to help identify stocks with stronger potential relative to others over a one-to-three-month timeframe.

The stock has a Value Score of C, Growth Score of A, Momentum Score of C and VGM Score of A. Zacks Style Scores of A or B indicate stronger characteristics within their respective investment styles, while the Zacks Rank remains the primary factor in the stock selection process.

The Zacks Rank can change as analysts update earnings estimates following reported results and new company information.


 

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