Meta delivers 28% revenue growth in Q2; Net income slips 14% amid AI investments

Meta Platforms posted a robust top-line performance in the second quarter of 2026, underlining the strength of its AI-powered advertising business even as rising investments continued to weigh on margins and profitability.

For the quarter ended June 30, 2026, the company reported revenue of $60.8 billion, up 28% year-on-year from $47.5 billion in the corresponding quarter last year. The growth was largely fuelled by its advertising business, with advertising revenue climbing to $59.36 billion, compared with $46.56 billion a year ago—an increase of nearly 27%, reaffirming advertising as Meta's primary growth engine.

The company attributed the strong advertising performance to improvements across both volume and pricing. Ad impressions delivered across Meta's Family of Apps increased 14% year-on-year, while the average price per ad rose 12%, reflecting stronger advertiser demand and continued gains from AI-driven ad optimisation and recommendation systems.

However, the aggressive investment cycle around artificial intelligence and infrastructure continued to pressure earnings. Income from operations declined 8% to $18.78 billion, down from $20.44 billion in Q2 2025, while the operating margin narrowed sharply to 31% from 43% a year earlier.

Meta's net income fell 14% to $15.85 billion, compared with $18.34 billion in the year-ago quarter, as expenses accelerated faster than revenue. Total costs and expenses surged 55% year-on-year to $42.03 billion, partly driven by a $2.40 billion legal charge and $1.8 billion in severance expenses related to the company's May 2026 workforce reduction.

The company's spending priorities were also reflected in its operating costs. Marketing and sales expenses increased to $3.43 billion, up from $2.98 billion in Q2 2025, representing an increase of around 15%. While marketing remained a relatively small component of Meta's overall expenditure, the rise suggests continued investments in product adoption and commercial expansion alongside AI deployment.

The biggest story, however, remains Meta's infrastructure build-out. Capital expenditure reached $31.08 billion during the quarter, underscoring the company's accelerating investment in AI data centres, computing infrastructure and next-generation technologies. The elevated capex signals that Meta continues to prioritise long-term AI capabilities over near-term margin expansion.

On a six-month basis, the trend remains equally evident. Revenue for the first half of 2026 rose to $117.11 billion from $89.83 billion in the previous year, while advertising revenue increased to $114.39 billion from $87.96 billion. At the same time, marketing and sales expenses rose to $6.34 billion from $5.74 billion, whereas income from operations improved to $41.65 billion from $37.99 billion and net income increased to $42.62 billion from $34.98 billion, indicating that despite quarterly pressure, Meta continues to deliver stronger profitability over the longer period.

Commenting on the results, Meta CEO Mark Zuckerberg said AI is accelerating the company's core business while enabling entirely new enterprise opportunities. The latest quarter reflects that dual narrative: AI is making Meta's advertising engine more efficient and effective, driving higher ad pricing and engagement, even as the company spends aggressively to build the infrastructure required to sustain its long-term AI ambitions.

For advertisers and the broader digital advertising ecosystem, Meta's results reinforce a growing trend—AI is no longer just enhancing campaign performance but is increasingly becoming the foundation of revenue growth. The challenge ahead will be balancing those investments with shareholder expectations for sustained profitability.