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Meta Q2 2026 earnings preview: can AI ads pay off?

‘Buy’, price target (PT) $835 (26% upside): healthy ad growth, margin tailwind from May layoffs. Sees third quarter (Q3) guide at $60.5 billion – $63.5 billion, up 18% –24% year-on-year (YoY). AI story: content retrieval, ad-model integration, Muse Spark, plus a possible Anthropic compute deal.

Beat expected, capex is the headline: models 2027 capex at ~$205 billion (+22%), tied to a 14GW buildout. Big Three hyperscaler capex hits $801 billion in 2027 – enough to push all three negative on free cash flow (FCF) through 2028.

Bottom line: the ad business might be fine. The tension is entirely how much Meta spends to stay in the AI race, and whether the market’s patience for negative FCF holds.

www.ig.com

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