Deep dive
Meta
META · Hyperscalers
It has told the market it will spend up to $145 billion this year to support its AI efforts, and has never disclosed a single dollar of AI revenue.
- Figures as of
- Q2 2026, the quarter to 30 June 2026
- Last re-read
- 20 September 2026
- Stance
- Education, not advice
- Position
- AllFactsAI holds no position in Meta (META), as at 4 September 2026.
The short version
- Guided capital spending, 2026$130bn–$145bnIn its own words, "to support our AI efforts and core business".Filed
- Free cash flow$784mIn the June quarter. It was $8.55bn in the same quarter of 2025.Filed
- AI revenue disclosed—Revenue is split three ways — advertising, other, Reality Labs — and by geography. There is no AI line anywhere in the filings.Editorial
The business
What it sells
Meta sells advertising. In the June quarter, advertising was $59.36bn of $60.80bn of revenue — better than 97 cents in every dollar — sold across Facebook, Instagram, WhatsApp and Messenger, the segment it calls Family of Apps.
Reality Labs, the headsets and glasses, took $431m of revenue in the same quarter and lost $4.62bn running. That is the shape of it: an advertising business of extraordinary scale, funding a second business that has never paid for itself.
AI sits inside the advertising business rather than beside it. It ranks the feed, picks the ad and writes the copy, and Meta says it is working — but it is paid for in advertising dollars and reported as advertising revenue. There is no AI product line to point at.
- Advertising$59.36bn97.6%
- Other revenue$1.01bn1.7%
- Reality Labs$0.43bn<1%
The June quarter, as filed. Advertising is 97.6% of it. Reality Labs took $431m and lost $4.62bn running — the split shows what pays, not what costs.
Where the revenue comes from
Hyperscalers
Place in the chain
Meta is a buyer, not a seller. It sits in the hyperscaler layer with the other companies whose capital budgets fund the build-out: it purchases accelerators, leases data centres and buys power, and every dollar of that shows up as cost. Nvidia's exposure is a revenue line; Meta's is a spending line, and the difference decides which way a slowdown would cut.
See its AI exposure →
The numbers
Revenue grew 49% over the three years. Capital spending grew 157% — and 2026 is guided at $130–145bn, which is more in one year than these three put together. Capex here includes principal payments on finance leases, the same basis Meta guides on.
Show as table
| Year | Revenue | Capital spending |
|---|---|---|
| FY2023 | $134.90bn | $28.10bn |
| FY2024 | $164.50bn | $39.23bn |
| FY2025 | $200.97bn | $72.22bn |
FY2025: Revenue $200.97bn, Capital spending $72.22bn.
Q2 2026, the quarter to 30 June 2026
The latest quarter
The June quarter is where the two lines crossed. Revenue grew 28%, which for a business this size is remarkable on its own. Costs grew 55%, so operating income fell 8% and the margin went from 43 cents in the dollar to 31.
Some of that is one-off: $2.40bn of legal charges and $1.18bn of severance for the roughly 8,000 roles cut in May. Most of it is not. Research and development rose 67% year over year, and Meta lists third-party AI token costs among the reasons without putting a number on them.
Cash tells the plainest version. Free cash flow was $784m, against $8.55bn in the same quarter last year — a 91% fall, with $31.08bn of capital spending in the quarter as the cause. The company has moved from generating cash at scale to spending it at scale, on purpose and in public.
What it is buying is mostly leases. $278.99bn of lease obligations were signed but not yet started at the end of June, with about $68bn more agreed in July for 2027 and 2028. Those commitments run 18 to 20 years.
- Revenue, June quarter$60.80bnUp 28% year over year; up 27% in constant currency.Filed
- Income from operations$18.78bnDown 8%. The margin was 31%, against 43% a year earlier.Filed
- Costs and expenses$42.03bnUp 55%, including $2.40bn of legal charges and $1.18bn of severance.Filed
- Research and development$21.66bnUp 67% from $12.94bn. Meta names third-party AI token costs among the drivers, without sizing them.Filed
- Capital spending, June quarter$31.08bnIncluding principal payments on finance leases. $50.92bn across the six months.Filed
- Free cash flow$784mDown from $8.55bn. Capital spending is what closed the gap.Filed
- Diluted earnings per share$6.18Down 13% from $7.14.Filed
- Headcount75,472Down 1% year over year, including about 8,000 roles cut in May 2026.Filed
- Leases signed, not yet started$278.99bnData centres, colocation and network infrastructure, as at 30 June 2026 — plus about $68bn more signed in July.Filed
- Reality Labs losses, four reported periods$61.69bnFY2023, FY2024, FY2025 and the first half of 2026, summed. Not a since-inception figure: Meta does not publish one.Computed
What's working, what could break
What's working
- Revenue grew 28% year over year at a $240bn annual run rate — acceleration, not maturity.
- Advertising is 97% of revenue and it is growing; the core business is not the question here.
- Management says AI is already improving that core business, and the revenue line is consistent with the claim.
- It funds the spending from operations rather than dilution: headcount fell 1% while R&D rose 67%.
What could break
- Not one dollar of AI revenue is disclosed, so the return on $130–145bn of annual spending cannot be checked from outside.
- Operating margin fell twelve points in a year, and free cash flow fell 91%.
- $278.99bn of leases are signed but not started, on 18-to-20-year terms — a commitment that does not flex if demand does.
- Reality Labs has lost $61.69bn across the four reported periods alone, and the losses are not narrowing.
- Long-term debt went from $58.74bn to $83.66bn in six months, after a $25bn note sale in May.
Our read
Verdict
Spends like an AI company, earns like an ad company, and discloses no AI revenue at all. The exposure is entirely on the cost side.
Editorial
What would change our read
- An AI revenue lineAny figure — a segment, a product, a stated run rate — would turn the biggest AI capital budget in the world from an act of faith into something a reader can check.
- The margin stabilisingCosts grew twice as fast as revenue this quarter. A quarter where they grow together would say the spending has found its level.
- Leases slowing$279bn of signed-but-not-started leases is the commitment behind the capex. A quarter where that number falls is the first sign of restraint.
Sources
- Meta Q2 2026 Form 10-QCapital spending, leases and commitments, cost drivers, the AI language
- Meta Q2 2026 results releaseQuarterly revenue, margin, segments, headcount, free cash flow, guidance
- Meta FY2025 Form 10-KFull-year revenue and capital spending, Reality Labs losses, headcount