Meta shares dropped more than 8% after hours as the company laid out a $130 billion to $145 billion AI investment plan for the year while missing second-quarter earnings estimates and warning of softer third-quarter revenue. The selloff arrived in a market already rattled by new Federal Reserve chief Kevin Warsh, who left rates unchanged but signaled openness to hikes as the U.S.-Iran war pushes oil prices higher.
The numbers that mattered
Revenue for the quarter ended June rose 28% from a year earlier to $60.8 billion, beating forecasts as ad impressions climbed 14% and average price per ad increased 12%. Digital advertising still accounts for almost all sales, and the AI tailwind there is real. But the company also reported 3.6 million Daily Active People, its preferred user metric, and missed Wall Street’s earnings-per-share target. The guidance for the current quarter came in below expectations, and the stock had already shed 10% year to date before the report.
The spending arms race
The $130 billion to $145 billion outlay dwarfs prior capital cycles and puts Meta on a war footing with OpenAI, Anthropic and Google. The company is playing catch-up after hiring Alexandr Wang in June 2025 to lead the newly renamed Meta Superintelligence Labs, a move that included a $14.3 billion stake in his startup Scale AI. On Tuesday Meta also unveiled a $14 billion data-center joint venture with BlackRock spanning El Paso, rural Louisiana and Alberta, Canada. Zuckerberg argued the spend is already accelerating the core business and opening enterprise doors. Investors are asking whether the door is big enough to justify the mortgage.
The macro backdrop
Meta’s earnings landed minutes after Warsh’s press conference, in which three of twelve FOMC members voted for a rate hike and the chair warned he would not hesitate to tighten further if inflation stays above the 2% target. Surging oil prices from the ongoing U.S.-Iran conflict are keeping inflation sticky. Higher rates hit capital-intensive tech hardest, and the Dow fell more than 1,000 points in its worst session of the year. Meta’s AI bet is now being priced not just on product velocity but on the cost of capital, a variable the company does not control.