Meta's Earnings Test: Can AI Spending Finally Show Its Payoff?

Meta reports second-quarter earnings after the closing bell Wednesday, and while the numbers themselves are expected to look solid, the real story is what CEO Mark Zuckerberg says about the tens of billions of dollars the company keeps pouring into artificial intelligence.

Analysts polled by LSEG expect Meta to post adjusted earnings of $7.22 per share on revenue of $60.17 billion, up 26% from $47.52 billion a year earlier. That growth is being driven largely by the same engine that's powered Meta for years: digital advertising, which the company says continues to benefit from AI-driven improvements to ad targeting and delivery.

But advertising strength isn't really what's in question here. What Wall Street wants to hear is how Meta plans to turn its AI ambitions into something more than a cost center.

The pivot to selling AI, not just using it

Meta has spent the past year trying to prove it can compete head-on with OpenAI, Anthropic and Google in building and selling AI models, not just using AI to improve its own products. That effort accelerated after the company hired Alexandr Wang as AI chief in June 2025, a move tied to a $14.3 billion investment in Wang's startup, Scale AI.

Earlier this month, Meta rolled out Muse Spark 1.1, which Wang described as the company's strongest model yet for agentic and coding tasks, and pitched it as cheaper than comparable offerings from OpenAI and Anthropic. Meta also launched Muse Image, a model with premium features tied to new monthly subscription plans the company introduced in May, giving power users and creators a reason to pay directly for Meta's AI tools.

That's a notable shift for a company that has built its entire business on free products supported by advertising. Investors will be listening for any detail on how these efforts are actually converting into revenue, beyond the pitch that AI makes ads more effective.

The infrastructure bill keeps growing

The bigger number for investors to watch might be capital expenditure, not earnings per share. In April, Meta raised its full-year capex forecast to a range topping out at $145 billion, up from $135 billion. Analysts expect the company to report $33.9 billion in capex for the second quarter alone, with a full-year projection around $136.7 billion.

The spending spree isn't slowing down. On Tuesday, Meta announced a joint venture with BlackRock for a $14 billion data center project in El Paso, Texas. That comes just weeks after the company disclosed that its Hyperion data center project in rural Louisiana will cost more than $50 billion, and after it revealed plans earlier in July for a $9 billion data center in Alberta, Canada.

Meta isn't alone in this arms race. Alphabet shares dropped last week after the company raised its own 2026 capex guidance to as much as $205 billion, up from a prior ceiling of $190 billion. Amazon and Microsoft are making similarly aggressive bets on data centers and AI chips. The difference is that Meta, unlike those three, doesn't have a cloud business to help offset the cost or generate a separate revenue stream from renting out computing power to other companies.

That may be starting to change. Zuckerberg has signaled Meta could begin selling excess AI capacity to third parties, and CNBC confirmed earlier this month that Anthropic is in preliminary talks to lease AI computing capacity from Meta. If that deal materializes, it would mark a real shift in Meta's role in the AI infrastructure landscape, from pure spender to potential seller.

Wall Street's patience is wearing thin

None of this spending has translated into stock gains this year. Meta shares are down 10% in 2026, lagging well behind the Nasdaq, as investors grow increasingly skeptical about whether the payoff from all this capex will show up in the numbers anytime soon.

Analysts at Wedbush summed up the tension in a note last week, writing that "the gap between capex intensity and diversified monetization remains the central debate for the stock." The firm holds the equivalent of a hold rating on Meta shares, saying that uncertainty is "the reason we remain on the sidelines despite Meta's valuation discount to peers."

That framing captures what makes this earnings report more consequential than a typical quarterly check-in. Meta's core business, measured by daily active people across its family of apps, is expected to hit 3.61 billion for the quarter, according to StreetAccount, with average revenue per person projected at $16.65. Those are strong, stable numbers for a company of Meta's size. The Reality Labs division, which houses Meta's virtual and augmented reality efforts along with AI-powered devices like the Ray-Ban Meta glasses, is expected to post a $5.07 billion loss on just $423.4 million in revenue, continuing its long pattern of burning cash.

The ad business works. The hardware bets remain a drag. And the AI spending, for now, is a bill investors are being asked to trust will eventually come with a return. Wednesday's call is Zuckerberg's chance to make that case with something more concrete than product announcements.