Last updated August 20, 2026

Macro Lessons from Q2

• Heavy AI spending may be catching up with tech leaders. Meta's free cash flow fell more than 90%, showing the extreme cost of fleshing out AI capabilities. Other heavy AI spenders like Microsoft and Google weren't dinged in the same way due to their cloud businesses offsetting costs; Meta said it will try to spin up its own.
• A deluge of AI-first ad tech companies makes it harder to stand out. AppLovin in particular saw growth begin to stall, a sign that focusing on AI isn't such a differentiator when more competitors are messaging similarly. AI itself isn't what's driving returns, as seen in Magnite's earnings—it's what AI is applied to. CTV was Magnite's strongest growing segment, but its other omnichannel AI offerings aren't growing as fast.
• Paramount and WBD's merger is on ice. A March 2027 court date is in the books, blowing past the initial September closing deadline, which could cost Paramount more than $1 billion in ticking fees. Results from both companies painted a grim picture and highlighted their hopes that consolidation will right the ship.
• Direct audience relationships are becoming more valuable as discovery changes. Reddit’s dispute with Google exposed the risks of relying on another platform for audience acquisition, particularly as AI reshapes referral traffic. Companies that depend on third-party platforms for discovery have less control over how audiences reach them, while those that can attract and retain audiences directly are better insulated from changes made by third-party distributors.
• Media growth is following audiences from linear to streaming. Paramount’s TV media revenues declined 9%, while Paramount+ revenues increased 16%. WBD’s global linear network ad revenues fell 27% YoY, while streaming ad revenues grew 9%. As the TV ad market evolves, growth opportunities are consolidating on the streaming side.

Key Earnings Season Events

• Meta stunned in Q2 with several misses and a more than 90% drop in free cash flow, sharply raising concerns that its AI spending could outpace its ad revenues.
• Paramount had a brutal quarter. Revenue growth was less than 1% at $6.9 billion. Just as it prepared to announce results, it received a March 7 court date for its lawsuit to defend its Warner Bros. Discovery merger—at which point it will owe WBD more than $1 billion in ticking fees. WBD revenues declined in every segment except streaming.
• Google enjoyed its second-ever, consecutive quarter with more than $100 billion in revenues. The results show marketers are biting at its AI features, and offset some investor concerns about high AI spending.
• Peacock made its first-ever profit in Q2 in large part because of the FIFA World Cup, reinforcing the importance of live sports in the streaming race.
• Reddit's earnings performance was overshadowed by a dispute with Google that raised questions about its dependence on the search giant. AI Overviews are eating into its traffic, and the company tried to make the case that it can thrive without Google.