Meta stock rebounded to about $593 in premarket trading after one of its most volatile post-earnings stretches in recent quarters, but the recovery has not resolved the market’s main concern. The company’s core advertising engine remains strong, yet free cash flow fell to just $784 million as quarterly capital expenditures climbed to $31.08 billion.
That contrast explains the split reaction in the shares. Revenue reached $60.8 billion and advertising revenue rose to $59.4 billion, both signaling continued operating strength. But investors focused on how little of that cash generation is reaching shareholders while Meta accelerates spending on data centers and AI infrastructure.
Technical trading levels also matter in the near term. The stock tested both resistance near $600 and support around $580, leaving the market to decide whether Meta stock can build a durable base or face another leg lower before its next earnings catalyst on October 28, 2026.
Key Facts
- Meta reported second-quarter revenue of $60.801 billion, including $59.4 billion in advertising revenue, up 27% year over year.
- Free cash flow dropped 90.8% to $784 million from $8.5 billion a year earlier as capex reached $31.08 billion.
- Full-year capital expenditure guidance was raised to $130 billion to $145 billion, with a midpoint of $137.5 billion.
- Long-term debt rose to $83.7 billion after the company added $24.9 billion of borrowing during the quarter.
- Meta stock traded around $593.40 premarket, after testing a session high of $603.60 and a low of $580.12.
Meta Stock
Meta’s latest quarter showed two very different stories inside the same results. On one side, the company delivered the kind of top-line growth most large-cap technology names would welcome. Advertising revenue grew 27%, ad impressions increased 14%, and average price per ad rose 12%. That combination suggests Meta is still gaining efficiency from its AI-driven targeting and ad tools, even at massive scale.
On the other side, the market is no longer valuing Meta primarily as a high-margin ad platform with exceptional cash conversion. The new issue is capital intensity. Operating cash flow remained strong at $31.86 billion, but capex consumed 97.5% of that amount. As a result, free cash flow nearly disappeared, even before accounting for dividends and the pause in share repurchases.
This matters because Meta’s valuation framework is changing. For years, investors were willing to pay a premium for a business that combined dominant digital advertising share with abundant excess cash for buybacks. Now, the company is channeling much of that surplus into AI infrastructure, while asking shareholders to wait for returns that are not yet fully measurable. Advertisers, employees, suppliers, and long-term investors are all affected, but equity holders face the clearest trade-off: stronger strategic positioning now in exchange for lower near-term cash returns.
Meta’s ad machine is still delivering, but the stock will struggle to rerate higher until investors see clearer returns on its AI spending.
Why the cash flow story changed so sharply
The headline earnings miss looked severe, but much of the real repricing came from cash flow and spending guidance. Diluted earnings per share came in at $6.18, below market expectations, while net income was pressured by $2.4 billion in legal charges and $1.18 billion in severance costs. Those items distorted the quarter, but they were not the only issue.
The more durable shift is that Meta raised its full-year capex range again, this time to $130 billion to $145 billion. That is the latest step in a sequence of upward revisions that has steadily increased investor concern. The company also announced a $14 billion data center joint venture tied to El Paso, signaling that off-balance-sheet structures may become a larger part of how it funds compute expansion.
Implications for Investors
For investors, the Meta case now depends less on whether the advertising business is healthy and more on whether AI investment can produce visible returns fast enough to support the stock. The ad business itself remains strong. Family daily active people reached 3.60 billion, and monetization continues to improve much faster than user growth. In isolation, those metrics support a constructive long-term view.
The near-term risk is that cash deployment continues to overwhelm operating momentum. Meta has stopped repurchasing shares after buying back $26.26 billion in fiscal 2025, while long-term debt has risen to $83.7 billion. The dividend remained in place, but quarterly payouts of $1.353 billion exceeded free cash flow, raising fresh questions about capital allocation discipline if spending remains near the top end of guidance.
Valuation offers some support, but not enough to remove uncertainty. Meta trades at roughly 22 times trailing earnings, close to or slightly below its three-year average, despite revenue growth of 28%. That may look attractive on an earnings basis, yet investors are increasingly focused on free cash flow yield, balance-sheet trajectory, and the depreciation burden that this year’s capex will create in 2027 and 2028. Key watch points include whether capex stops rising, whether AI products such as coding tools produce material revenue, and whether third-quarter revenue can exceed the midpoint of the company’s $61 billion to $64 billion guidance.
Until the October 28, 2026 earnings report, Meta stock is likely to trade on sentiment, technical levels, and any signs that AI spending is beginning to translate into clearer returns. If support near $580 holds and cash flow stabilizes, investors may regain confidence; if spending rises again without a stronger payoff, the debate over Meta’s valuation will intensify.