Meta Platforms shares plunged roughly 9% in after-hours trading Wednesday as investors looked past strong revenue growth and focused on the enormous cost of the company’s artificial intelligence expansion. The sell-off was compounded by a slightly hawkish Federal Reserve rate decision.
Meta reported second-quarter revenue of about $60.8 billion, slightly above Wall Street expectations, as its core advertising business continued to grow. However, earnings of $6.18 per share fell well below analysts’ forecast of roughly $7.14 to $7.19. The primary catalyst behind the earnings squeeze was a massive 55% year-over-year AI-driven increase in overall costs, which swelled to $42.03 billion in the quarter. Depreciation fees tied to newly operational data center clusters, elevated server component prices, and higher compensation for AI talent weighed heavily on operating margins, which came in at 31%.
Management’s comments during the earnings call suggested that Meta’s spending on data centers, AI chips, technical talent and computing capacity could remain elevated for considerably longer than investors had hoped. The company raised the lower end of its full-year capital expenditure guidance, now projecting 2026 capex to range between $130 billion and $145 billion, up from its previous floor of $125 billion. CFO Susan Li also highlighted macroeconomic uncertainty and potential foreign exchange headwinds, with third-quarter revenue guidance of $60–$63 billion coming in below the consensus estimate of $63.5 billion.
The earnings arrived shortly after the Federal Reserve kept interest rates unchanged at 3.50% to 3.75%. Notably, three policymakers voted for a quarter-point increase, adding to concerns that rates could remain high or even rise again if inflation stays elevated. Higher interest rates are particularly damaging for expensive growth stocks and risk assets, as they reduce the present value of profits expected years into the future.
The combination of Meta’s disappointing guidance, increased AI capex, and a resolute Fed injected caution across markets. Crypto markets often take cues from tech stock sentiment and monetary policy expectations, and the prospect of persistently high rates could pressure valuation-sensitive assets like Bitcoin and Ethereum.
