Meta has reported revenue of $66bn for the quarter which ended 30 June, a 28% increase from the same quarter last year – but it has seen a 55% increase in costs, which have risen to $42bn.
The costs incurred include $2.4bn of charges related to legal proceedings and $1.18bn of severance expenses in connection with the May 2026 headcount reduction. The company is ploughing money into artificial intelligence (AI) technical infrastructure, not only to support its advertising business and surface more relevant content to customers, but also as a possible infrastructure service to offer businesses.
Meta CEO Mark Zuckerberg said: “We expect that a significant portion of our compute is going to go towards training our models, growing our core business, and delivering personal agents and new products. But we also expect to grow a large business serving large customers as well. We’ve built our API [application programming interface], we’re rolling out business agents.”
Discussing the company’s bet on AI and buildout of AI infrastructure, chief financial officer Susan Li said: “We believe that overall industry capacity is going to remain tight for the foreseeable future.”
She said the models, consumer experiences and enterprise offerings the company is building will offer the highest return on investment for its tech infrastructure. “Those enterprise offerings have the potential to take multiple forms – agentic tools, our API, or monetising compute directly given outsized market demand. We expect that remaining nimble about these opportunities will help us fund our buildout more efficiently while preserving our strategic flexibility to have the compute when we need it and provide us multiple pathways to generate returns on invested capital.”
When asked how Meta is leveraging better models and more compute, Li said: “We certainly see further headroom to continue improving recommendations over the rest of the year and into 2027, and we expect that will help us drive additional gains on both engagement on Facebook and Instagram.”
She said Meta plans to continue to make recommendations even more personalised and relevant to user interest by advancing its recommendation models and architectures to capture user interest more precisely and respond faster. “Our AI investments are going to play a significant role in delivering on this vision including the expansion of LLM [large language model]-based content understanding to develop a deeper understanding of posts and creators that people value, to capture user interests more precisely and respond more quickly to what they care about in the moment, and using AI to surface high-quality, fresh and trending content and reduce the share of low-quality content,” said Li.
She said Meta is also improving its data infrastructure to allow its models to train on more data and leverage data more effectively. “We’re adding more detail to how we describe content that users have engaged with in the past and enriching past user interaction sequences with more granular content,” said Li. “This allows our models to learn which engagements are more or less valuable to users.”
Discussing the financial results, Forrester’s vice-president and principal analyst, Mike Proulx, said: “Meta believes AI infrastructure is now a strategic asset, but its bill is arriving faster than the payoff. Meta’s ad business is still a monster, but everything else got more expensive.
“Revenue beat expectations and engagement continued to grow, but what it generated in cash this quarter almost all got eaten by AI infrastructure spending,” he added. “Investors now have to decide whether Meta’s growing list of AI initiatives represents company diversification or distraction.”
Proulx noted that Meta’s legal and regulatory challenges are getting more expensive, which could impact its business. “The company took a $2.4bn legal charge this quarter and again warned investors about youth-related scrutiny and upcoming youth-related trials that could result in a material loss,” he said.
