• by Colin Kirkland , Yesterday

Meta boosted its advertising revenue in its second-quarter report for 2026, while CEO Mark Zuckerberg attempted to assure investors on the company’s AI-first investments and looming regulatory issues.

In Q2, Meta reported a 27% year-over-year revenue increase in its advertising business, hitting $59.4 billion for the quarter.

Ad impressions delivered across the company's family of apps rose by 14% year-over-year, with the average price per ad increasing by 12%.

Overall revenue was $60.8 billion, marking an increase of 28% year-over-year. Meta missed on earnings per share and the midpoint for its Q3 revenue outlook, sending stocks tumbling after the bell on Wednesday.

According to an earnings call with analysts, Zuckerberg said that the company’s ad business gains were driven by Meta’s Advantage+ AI-powered ad suite, which reached a $75 billion annual revenue run rate in Q2.

In addition, Meta CFO Susan Li called the company’s new “Generative Recommender” “a paradigm shift” in how the company’s advertising system operates. The new feature is a large-language-model-based (LLM) ad-recommendation framework that evaluates ad creative and user preferences to provide precise ad matches.

“Rather than scoring every possible ad individually, we are now using LLMs to reason about ad content and user preferences together, and predict the best ad for each person,” Li said.

“AI is accelerating our core business today, powering our next generation of products,” Zuckerberg said, adding that over 9 million small businesses are currently using at least one of the company's AI creative tools.

“I think that it’s extremely unlikely if you look out five years from now, for example — whatever period of time you want — that you don't have billions of people with a personal agent that understands your goals and that is just working on your behalf 24/7 to achieve your goals in whatever the domain is that you care about,” Zuckerberg told investors.

In developing its AI agent ecosystem across its apps and products, Meta reported a free cash flow of $784 million this quarter, marking a 91% drop year-over-year from $8.55 billion in Q2 2025.

The company was forced to raise the lower-end of its expense outlook to include the $2.4 billion in legal charge, noting ongoing regulatory pressures from markets across the globe, including “a number of youth-related trials scheduled for this year in the U.S., which may ultimately result in a material loss.”

“Meta believes AI infrastructure is now a strategic asset, but its bill is arriving faster than the payoff,” Forrester Vice President and Research Director Mike Proulx told Marketing Dive.

“Revenue beat expectations and engagement continued to grow, but what it generated in cash this quarter almost all got eaten by AI infrastructure spending,” Proulx added. “Investors now have to decide whether Meta's growing list of AI initiatives represents company diversification or distraction.”