Meta earnings AI spending fears take center stage on Wall Street
Meta reports Wednesday as investors weigh AI spending, negative cash-flow forecasts and Alphabet’s warning shot.
By Sal Moretti · Money Reporter
3 min read
Meta earnings AI spending concerns are set to dominate Wall Street’s next Big Tech checkup, with the Facebook parent due to report second-quarter results Wednesday afternoon alongside Microsoft, according to MarketWatch.
The mood is tense because Alphabet’s report last week gave investors plenty to chew on. MarketWatch reported that Alphabet posted strong cloud growth, but also lifted its capital-expenditure outlook and recorded its first quarter of negative free cash flow.
That combination has sharpened attention on Meta’s own AI bill. The company has faced repeated criticism over its spending in recent quarters as it reworked its AI plans around Meta Superintelligence Labs, MarketWatch reported.
Meta shares are down 10% for the year to date, according to the report.
Why are investors worried about Meta earnings?
Investors are watching whether Meta’s AI push can show enough momentum to justify the cash going out the door. Capital expenditure, or capex, refers to spending on long-term assets such as data centers and computing infrastructure, which are central to AI expansion.
Before Alphabet’s results, Deutsche Bank analyst Benjamin Black wrote that expectations were limited for Meta to raise its current 2026 guidance of $125 billion to $145 billion, according to MarketWatch. After Alphabet’s capex update, the report said investors may now be preparing for the chance that Meta lifts its own outlook.
FactSet-tracked analysts expect Meta to report $60.2 billion in revenue and earnings of $7.19 a share, MarketWatch reported. They also project Meta’s free cash flow will swing negative for the quarter, at negative $801 million.
Free cash flow is the cash a company has left after operating costs and capital spending. A negative number can become a flash point when investors are already questioning whether AI infrastructure spending will pay off soon enough.
What are analysts saying about Meta and AI?
Paul Meeks, managing director at Freedom Capital Markets, wrote in a Monday note cited by MarketWatch that if Alphabet’s strong results could not lift the AI trade, then positive quarters, guidance and AI spending comments from Meta and Microsoft may not satisfy skeptics either.
Meta has been trying to build AI businesses beyond its core advertising operation, according to the report. The company introduced the Muse Spark 1.0 model in April, then released Muse Image and Muse Spark 1.1 in July.
MarketWatch reported that Muse Spark 1.1 was Meta’s first AI model with competitive agentic coding abilities and its first to be sold through an API.
Black wrote that the faster pace of releases supports Deutsche Bank’s view that Meta Superintelligence Labs has moved past rebuilding its training and post-training systems and into a more regular product cycle, according to MarketWatch.
Could Meta sell AI compute to other companies?
Meta is reportedly planning to sell compute capacity to outside customers, MarketWatch said, a move that could let the company make money from its data centers beyond its own AI work.
Raymond James analyst Josh Beck wrote last week that such a plan would give Meta another path if its internal AI models or business agents fall short of expectations, according to MarketWatch.
Beck also said the AI cloud market offers attractive returns on investment because demand for compute capacity continues to exceed supply, MarketWatch reported.
For Wednesday’s report, the fight is clear: Meta has to convince investors that its AI machine is not just expensive, but useful enough to back the spending.
This story draws on original reporting from MarketWatch.