Meta stock bounced back on Friday, July 31, gaining 3.28% to close at $556.71, as investors reassessed the company’s heavy artificial intelligence spending after a sharp post-earnings selloff two days earlier.
Meta reported Q2 earnings on July 29 that missed expectations on profitability, with diluted earnings per share of $6.18 falling short of the consensus estimate of roughly $7.22. The company also raised its capital expenditure floor for 2026 to $130 billion, up from a previous range that started at $125 billion, signaling an aggressive commitment to building AI infrastructure despite margin pressures.
The earnings miss triggered an immediate market reaction, with Meta shares dropping nearly 8% in after-hours trading on July 29. The key concern was free cash flow, which collapsed 91% year-over-year to just $784 million as the company’s capital spending surged. Investors worried that Meta’s massive AI investment—expected to reach between $130 billion and $145 billion for the full year—would continue to weigh on profitability and cash generation.
The recovery on July 31 came as sentiment shifted across the technology sector following Amazon’s AWS earnings results. Meta stock rebounded 1.9% as Amazon’s strong cloud and AI performance improved overall confidence in the durability of heavy AI spending among major tech firms. The broader market message suggested that aggressive capital deployment for artificial intelligence infrastructure could still deliver returns, even if near-term profitability suffered.
Meta’s revenue performance offered some support for this narrative. The company beat on the top line, with Q2 revenue jumping 28% year-over-year to $60.8 billion. For the third quarter, Meta guided for revenue between $61 billion and $64 billion, implying mid- to high-20% growth at the midpoint. The advertising business, driven by AI-powered targeting and optimization, remained strong despite the company’s broader profitability challenges.
The earnings call emphasized Meta’s strategic rationale for the spending increase. The company highlighted a significant data center partnership and stressed dynamic planning driven by AI opportunities, suggesting management views the capital intensity as temporary and necessary to capture market share in the emerging AI economy. Analysts on Wall Street maintained a consensus “Buy” rating on Meta, with price targets averaging around $787.65 for 2026, implying substantial upside from Friday’s close.
Sources
- Meta Investor Relations — Q2 2026 earnings announcement and guidance
- Wall Street Journal — Meta stock drops, capex raise, and revenue guidance details
- Reuters — Meta capex forecast raise and cash flow decline
- GuruFocus — Meta stock rebound on Amazon AWS sentiment shift
- Perplexity AI Finance — Meta stock price movements and free cash flow data
- CNN Markets — Meta stock closing price and percentage gain on July 31
