Meta Platforms has experienced a significant 91% drop in free cash flow during the second quarter compared to the previous year, a result of its substantial investments in artificial intelligence infrastructure. The company reported free cash flow of $784 million for the quarter ending June 30, a steep decline from $8.55 billion in the same period last year. This financial outcome led to a decrease in Meta’s share price during after-hours trading.
CEO Mark Zuckerberg emphasized that the company is heavily investing in computing power to train AI models, expand its core business, and develop both personal AI assistants and enterprise AI services. Despite the considerable initial expenses, Zuckerberg remains confident in Meta’s potential to make AI a significant long-term business driver. The earnings per share stood at $6.18, falling short of the analyst expectations of $7.22, although the company’s quarterly revenue saw a 28% increase year-on-year, reaching $60.8 billion, bolstered by a robust advertising sector.
Looking ahead, Meta anticipates capital expenditure between $130 billion and $145 billion for 2026, raising the lower end of its previous forecast to continue the expansion of its AI infrastructure and data center capacity. The company also grapples with ongoing legal issues, including lawsuits concerning youth safety on its social media platforms, which have contributed to increased legal expenses and restructuring costs impacting operating income for the quarter.
Despite these financial challenges and heightened spending, Meta reported a rise in daily active users across its apps, reaching 3.6 billion, indicating sustained growth in user engagement. This increase suggests that the company’s focus on expanding its technological and AI capabilities may be resonating with its vast user base, even as it navigates substantial fiscal and legal hurdles.