Meta’s Free Cash Flow Wiped Out as AI Buildout Grows
Meta raised 2026 spending plans after a $2.4 billion legal charge and $31 billion in quarterly capital spending drove free cash flow to $784 million.
- On Wednesday, Meta Platforms reported a 91% drop in free cash flow to $784 million in the second quarter, down from $8.55 billion a year earlier, reflecting the financial strain of its costly AI buildout.
- Revenue rose 28% to $60.8 billion, beating forecasts, yet profit fell 14% to $15.8 billion as operating margin declined to 31% from 43% a year earlier, revealing the high cost of aggressive AI investment.
- Meta raised 2026 capital expenditure guidance to between $130 billion and $145 billion, while booking $2.4 billion in legal charges and $1.18 billion in severance from the May layoff of about 8,000 staff.
- Shares dropped about 5% in extended trading after the report, while Alphabet reported negative free cash flow for the first time last week after spending $5.9 billion in the second quarter.
- Reality Labs lost another $4.6 billion, bringing its total losses past $80 billion, even as Meta established a $14 billion data-center venture with BlackRock to support long-term infrastructure needs.
20 Articles
20 Articles
Zuckerberg’s AI bet gets expensive: Meta’s free cash flow plunges 91% in Q2
Meta’s free cash flow plunged 91% in Q2 as the company ramps up AI spending, with its $145 billion infrastructure push weighing on finances despite strong ad revenue growth and rising user numbers
Despite posting $60.8 billion in revenue in the second quarter, Meta’s free cash flow plummeted by 91% as it poured 45 trillion won into AI infrastructure. Despite deteriorating profitability and a falling stock price, Meta reaffirmed its strong commitment to investing in the AI business by raising its annual investment forecast.
Meta misses profit expectations, sticks to massive AI spending
The social media giant said net income dropped 14 percent from a year earlier to $15.8 billion. Revenue, however, climbed 28 percent to $60.8 billion, beating estimates and underscoring the continued strength of its advertising business. Shares in Meta were down as much as 12 percent in after-hours trading, a sign of analyst skepticism over the scale of the company's AI spending. Its results contrasted with those of Microsoft, another tech giant…
Meta shares tumble 10% as Mark Zuckerberg’s AI spending spree stuns Wall Street
Meta Platforms reported a precipitous 91% drop in second-quarter free cash flow on Wednesday, underscoring the financial strain of the social media giant's costly AI buildout despite an uncertain payoff.
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