NEW YORK, July 26, 2026, 15:06 EDT — U.S. markets have finished trading for the day.
Meta ended Friday at $595.19, a decline of 1.8%. The Nasdaq fell 2% for the week.
Options are indicating a 7.4% move following earnings, or roughly $44 in either direction.
Meta is projected to have a capex-to-revenue ratio of 54.9% in 2026, topping the list of four leading AI investors.
Meta faces a critical challenge in its report on Wednesday: converting revenue into cash. LSEG projects that capital expenditures will represent 54.9% of its 2026 revenue, the largest proportion compared to its key megacap rivals.
Advertising accounted for 97.7% of Meta’s revenue in the first quarter, company data shows, placing the weight of earnings on that segment.
Options market participants are anticipating a swing of 7.4% following the release. Based on Friday’s closing price, this translates to an approximate $44 fluctuation in either direction. The implied trading band spans from about $551 to $639.
The pressure increased last week. The Nasdaq dropped 2%, marking a second consecutive weekly loss. Meta slipped 1.8% on Friday, as concerns over AI spending weighed on technology stocks.
Meta stands out for its unusually high reinvestment rate, according to LSEG’s projected capex intensity:
Reuters has reported these figures, based on analyst forecasts.
Meta reported robust first-quarter advertising figures, reassuring investors. Ad impressions increased by 19%, and the average price per ad was up 12%. Revenue surged 33% to $56.31 billion.
However, most of the investment is slated for later in the year. Meta’s first quarter expenditure reached $19.84 billion. The company projects total capital spending for the year between $125 billion and $145 billion.
With the midpoint set at $135 billion, average quarterly capex would need to reach $38.4 billion. This figure is 93% higher than the capex rate reported in the first quarter. The estimate is calculated and not official company guidance.
Meta projected revenue for the second quarter in the range of $58 billion to $61 billion. Deutsche Bank ETR:DBK analysts expect earnings near $60.5 billion. “Our ad checks were overwhelmingly positive,” they wrote Friday. AtMeta
Alphabet reported a $5.9 billion cash burn last quarter, even as cloud revenue surged by 82%. Shares dropped roughly 6% on Thursday. The market response has now shifted expectations for Meta and other major AI investors.
Meta’s AI assistant gained new task automation capabilities on Friday. The platform now allows users to schedule tasks, integrate applications and generate presentations. Meta did not specify a revenue goal for these additions.
The company will announce results following the close of markets on Wednesday. Its earnings conference call begins at 1:30 p.m. Pacific. That day also brings the Federal Reserve’s decision, introducing additional macroeconomic uncertainty.
Risks persist. Increased component expenses might push capital expenditure higher. Ongoing legal proceedings in the U.S. and Europe could negatively impact outcomes, and an unexpected rate hike may weigh on technology valuations.
For shareholders, headline earnings are not the most direct indicator. The crucial question is whether growth in advertising revenue can sustain a sharp increase in quarterly spending. A robust top-line outcome along with unaltered capital expenditure forecasts would partly address that question.
When is Meta scheduled to report, and what are analysts on Wall Street projecting?
Meta is set to announce its second-quarter results after the U.S. market closes on Wednesday, July 29. The earnings call will start at 4:30 p.m. Eastern that day. Analysts polled by Refinitiv expect revenue of $60.16 billion and earnings per share of $7.23. Visible Alpha projects operating profit at around $21.5 billion. The company’s first-quarter EPS of $10.44 included a $3.13-per-share tax benefit. Estimates may change before the report is released on Wednesday.
What is the benchmark for second-quarter revenue?
Meta projected second-quarter revenue in the range of $58 billion to $61 billion, with the consensus of $60.16 billion toward the top of that guidance. This would mark a 26.6% rise from $47.52 billion a year earlier. First-quarter revenue increased 33%, or 29% at constant currency. Investors may expect more than a small beat unless Meta offers clear outlook for the third quarter.
Is it possible for advertising growth to continue exceeding user growth?
Family daily active people rose 4% to 3.56 billion in Q1. Advertising revenue advanced 33% to $55.02 billion during the period. Ad impressions increased 19%, while average price per ad was up 12%. This signals continued strong monetization of Meta's advertising inventory. Meta has not broken out AI's share in this growth. Friday’s agentic-AI update did not include revenue or adoption figures.
Could Meta revise its capital spending outlook for 2026 upward once more?
Meta projects capital expenditures between $125 billion and $145 billion for 2026, following an April update attributed to increased component costs and higher data-center spending. This guidance is 73%–101% higher than the $72.22 billion total in 2025. Visible Alpha’s latest consensus estimate is about $136.7 billion. Alphabet stock dropped 6.8% after announcing its own spending increase. Meta’s capex guidance remains its most closely watched figure.
Is there evidence that operating margins are beginning to shrink?
The operating margin in the first quarter remained at 41%, matching the figure from a year ago. Expenses climbed by 35%, outpacing the 33% increase in revenue. Visible Alpha projects an operating margin of about 35.7% in the second quarter, suggesting a notable drop from the prior period. Management maintains its outlook for 2026 operating income to surpass that of 2025. Investors are watching for the impact of depreciation and AI payroll on that projection.
Is Meta able to finance its AI investments without putting pressure on its cash flow?
Operating cash flow for Q1 stood at $32.23 billion before substantial investment expenditures. Following $19.84 billion in capital investments, free cash flow amounted to $12.39 billion. Free cash flow increased by approximately 20% on the year. Cash and securities surpassed long-term debt by about $22.43 billion. The balance sheet is currently well funded. Still, annual spending has the potential to cause greater quarterly swings in cash generation.
What is the ongoing cost of Reality Labs to shareholders?
Reality Labs posted first-quarter revenue of $402 million, while operating losses for the segment reached $4.03 billion. That represents a loss of about $10 for every $1 in revenue. Visible Alpha projects operating losses around $5 billion in Q2. The consensus forecast for 2026 operating losses stands near $20 billion, compared with $19.19 billion in 2025. Based on current consensus, breakeven remains a distant prospect.
What caused Meta’s share price to decline, and does the valuation now offer appeal?
Meta ended Friday at $595.19, falling 1.8% on the day. Over the week, the stock declined 7.9%, compared to a 2.1% drop for the Nasdaq. The wider decline indicates investor concerns specific to the company, on top of the general technology downturn. Meta’s market capitalisation stands at about $1.53 trillion. Visible Alpha set the consensus price-to-earnings ratio for 2027 at nearly 18 times as of Thursday. This valuation is not clearly depressed, and it continues to reflect expectations for sustained growth in advertising and meaningful AI contributions.
Meta says ongoing U.S. and European litigation may have a material impact on its performance. Jury selection kicked off July 20 in Tennessee, dealing with alleged harm to teens. Meta denies liability, citing youth-safety measures. A prior New Mexico lawsuit resulted in a $375 million verdict. The amount of future damages, possible product updates and timing of further proceedings are still unclear. Introducing a larger reserve or issuing a stronger warning could affect Meta shares.
Mateusz Kaczmarek is a financial and technology journalist at TS2.tech. His coverage ranges from stocks and artificial intelligence to semiconductors and developments across global markets. He graduated from the Poznań University of Economics and Business and worked in financial analysis before becoming a business journalist. Follow Mateusz Kaczmarek on Google News.
