Meta Earnings Put AI Spending and Ad Growth Back in Focus

Key Points

• Meta reports Q2 2026 earnings on July 29, with investors watching whether advertising growth can keep offsetting rising AI spending.
• Analysts expect revenue growth to slow from Q1’s unusually strong pace, making ad impressions, ad pricing and Q3 guidance key metrics.
• Meta’s reported Anthropic cloud talks and Muse Spark 1.1 launch may not affect Q2 results, but management commentary could shape the longer-term AI story.

Meta Platform’s NASDAQ: META Q2 2026 financial results are quickly approaching, with the company set to release earnings on July 29 after the market close. Despite being down more than 8% year to date, the Magnificent Seven giant has recently seen its share price surge. The stock has rebounded around 10% from its 2026 low and now trades near $600.

This recovery is largely attributable to excitement around Meta’s reported cloud computing push and its Muse Spark 1.1 AI model. However, at this point, these potential growth drivers represent just that: potential. The company is reportedly in “very preliminary talks” to enter a $10 billion cloud computing deal with Anthropic, while it released Muse Spark 1.1 only around two weeks ago. In turn, these factors are unlikely to impact Meta’s results in Q2.

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The focus for Q2 will continue to be on Meta’s massive advertising business. These are the key headline figures and underlying metrics to watch, along with the commentary that could be important during the call.

Forecasts Point to Growth Deceleration; Spending Guidance Is Key

In Q1, Meta put up impressive metrics, particularly when it comes to growth. Revenue rose by 33% year-over-year (YOY), the company’s fastest growth rate since 2021. Meta also blew past expectations on adjusted earnings per share (EPS), although an unusual tax benefit caused the majority of its $3.77 beat.

In Q2, analysts expect the company to generate sales of $60.21 billion, or a growth rate of just under 27% YOY. Notably, this sales expectation is on the high end of Meta’s $58 billion to $61 billion Q2 guidance. Adjusted EPS expectations sit at $7.20, or growth of only around 1% YOY. Analysts currently forecast sales of $63.2 billion for Q3, and markets will look for Meta to provide midpoint guidance above this figure.

The key underlying metrics to watch are Meta’s ad impressions delivered, growth and price paid per ad growth. These figures demonstrate Meta’s ability to show users more ads and charge advertisers more for each, ultimately increasing ad revenue. The former grew by 19% YOY in Q1, while the latter grew by 12% YOY. Both were Meta’s highest growth rates in over a year. Given that revenue growth is forecast to fall, it would be reasonable to see a slight to moderate drop in these figures.

Besides the headline figures and underlying data, investors will pay close attention to any updates in Meta’s full-year capital expenditure (CapEx) guidance. In Q1, the company raised its CapEx range to between $125 billion and $145 billion, an 8% increase at the midpoint. This was one of the primary reasons that Meta shares dropped over 8% after its Q1 report. Thus, another increase could lead to the same fate, but investors will also weigh this against growth and future opportunities.

Cloud and Muse Spark 1.1: Will Meta Provide Any Insight?

While Meta's cloud segment and Muse Spark 1.1 may not impact its Q2 financial results, management could still provide important forward-looking commentary. For the cloud, it would first be notable for the company to explicitly confirm that it is moving into this business line. Given the significant amount of reporting around this topic in recent weeks, it's hard to imagine that Meta will not address it.

Going a step further would involve outlining in detail what its cloud approach would be. The different options may include simply selling raw access to computing power or doing so while also layering services on top. If Meta announced any actual customers, that would be huge news, and given the market’s past reaction to third-party reports alone, it could boost the stock. However, it may be too early to expect any such announcement.

Although Muse Spark 1.1 is still very new, Meta may choose to disclose some preliminary numbers. One possibility is that Meta provides early token consumption metrics, a commonly used proxy for AI model demand. A large figure would indicate strong interest. For reference, Alphabet NASDAQ: GOOGL said its first-party models were processing 22 billion tokens per minute in Q2. Nonetheless, it could still be too early for Meta to provide tangible figures on Muse Spark 1.1.

Any insight into demand for Meta’s recent subscription offerings or on reports that it may issue equity to raise AI investment capital would also be notable.

Meta’s Valuation Below 3-Year Average as Analysts Point to Strong Upside

Overall, Q2 provides Meta with an opportunity to show that its AI investments are paying off, primarily through growth in its advertising business. Making significant statements around its more forward-looking initiatives would help indicate that it can expand AI growth beyond advertising alone.

Just days ahead of its report, Meta trades at a forward price-to-earnings ratio near 20.1x. This is moderately below its 23x average during the past three years. Meanwhile, Wall Street analysts continue to express bullishness. The MarketBeat consensus price target on Meta sits near $836, implying upside of over 30%.