Global Stock Markets

Meta Platforms shares tumbled nearly 8%, continuing a trend seen yesterday as escalating artificial intelligence infrastructure costs squeezed profitability. The social media giant posted second-quarter earnings per share of $6.18, missing Wall Street expectations of $7.14 despite revenue reaching $60.8bn against $60.23bn projected. Operating expenses rose alongside $2.4bn in legal charges, prompting Meta to lift its 2026 capital expenditure target to $130bn–$145bn from $125bn–$145bn. The surge in capital intensity transfers cash directly to hardware suppliers while compressing Meta's near-term margins. Skeptics on Wall Street worry the massive capital deployment lacks clear monetization, while CEO Mark Zuckerberg contends that open AI infrastructure prevents centralized tech monopolies. No dissenting earnings figures were reported. This cautious thesis would be challenged if full-year expenses finish below the prior $162bn bottom guidance bound.

Continuing yesterday's sector momentum, UK defence contractors upgraded earnings forecasts as elevated geopolitical conflict drove government orders. Rolls-Royce boosted its underlying operating profit guidance to £4.7bn–£4.9bn from £4.0bn–£4.2bn, lifting its shares 5%. BAE Systems expects profit growth of 10%–12%, up from 9%–11%, sending its stock 2% higher. Government commitments to fund Tempest fighter jets and autonomous drones flow directly into supplier order backlogs, driving sustainable corporate cash flows.

Shell shares rose 2% after reporting second-quarter net profit of $9.8bn, more than double the prior year's figure, as Middle East conflict drove Brent crude to elevated levels. Higher realized prices and energy trading margins outweighed a 30% drop in integrated gas output caused by missile strikes halting Qatar's Pearl facility. Strong operational cash generation enabled the energy major to maintain its $3bn quarterly share buyback, transferring elevated commodity price windfalls directly back to equity investors.