Meta's latest quarterly report delivered a mixed picture: revenue came in above expectations while earnings fell short, leaving the market undecided in its reaction. Second-quarter revenue reached $60.8 billion, beating the $60.22 billion consensus and rising 28% year-over-year. Earnings per share, however, landed at $6.18 against the $7.19 expected, and shares fell roughly 3.4% in the immediate aftermath of the release.

The more consequential story sits beneath the headline numbers. Free cash flow collapsed 91% year-over-year to just $784 million, a direct consequence of Mark Zuckerberg's aggressive AI buildout. Capital expenditure alone hit $31.1 billion in the quarter, part of a planned $130-145 billion for the full year. That trajectory puts Meta in step with Microsoft, Alphabet and Amazon, all of which have been ramping up spending on AI data centers, a buildup that has made capex guidance a headline item across big-tech earnings season. It also marks a shift for a company that historically carried little debt and funded infrastructure largely from operating cash flow, and Meta has turned to the corporate bond market in recent years to supplement its spending power.

The company is betting heavily on what it calls "personal superintelligence," recently launching new Muse AI models in support of that ambition, while its core business remains formidable: the Family of Apps reached 3.6 billion daily active people in June. That equates to more than two-fifths of the global population using at least one Meta app each day, reach that matters here because advertising still supplies the vast majority of Meta's revenue, and therefore the cash the AI bet draws on.

Further pressures persist. Fresh privacy scrutiny in Europe and mounting US legal challenges around youth safety have kept sentiment cautious. European regulators have already fined Meta under the Digital Markets Act over its "pay or consent" ad model, while dozens of US state attorneys general and numerous school districts have sued over allegations that its platforms harm young users, cases Meta is contesting. With shares down roughly 11% year-to-date and trading well below the 52-week high near $796, the market is still weighing whether the AI bet will pay off.

Technical Analysis of Meta Platforms

As the daily chart shows, META has been trading within a broader descending trendline since January's highs near $740. Price recently rebounded sharply off the post-earnings low near $524.75 before running into a wall of resistance at the confluence of the 200-day EMA, the 0.618 Fibonacci retracement near $622.96, and the descending trendline itself around $600. That rejection has since pulled price back toward the 0.382 retracement near $585.46. The 200-day EMA is one of the most widely followed dividers between long-term uptrends and downtrends, which is why this particular confluence carries more weight than any single indicator would on its own.

Bullish scenario: Should buyers defend the 0.382 support and stage another push higher, the key test remains that same trendline-EMA-Fibonacci confluence near $605-$625. A confirmed break above this zone would represent a significant technical shift, opening the path toward the 0.786 retracement near $649.66 and, eventually, the 1.0 level at $683.67.

Bearish scenario: Conversely, a break below the 0.382 support at $585.46 would signal renewed weakness. The 0.5 retracement near $604 stands as a lesser hurdle that has already been cleared, but the more important risk is a full retest of the $524.75 low that marked the post-earnings capitulation.

With price wedged between a defended support and a stubborn multi-month trendline, META's next move is set to determine whether this rebound has real legs, or whether the broader downtrend in place since January remains very much in control. Away from the chart, the next scheduled checkpoints are Meta's following quarterly update, including any revision to the $130-145 billion capex plan, fresh daily-active-people figures, and developments in the European and US proceedings.

Source: FXOpen Blog