Meta Platforms experienced a significant drop in free cash flow, plummeting 91% year-over-year in the second quarter, as a result of substantial investments in artificial intelligence infrastructure. The company revealed a free cash flow of $784 million for the quarter ending June 30, a steep decline from the $8.55 billion recorded the previous year. This financial performance prompted a decrease in Meta’s share price during after-hours trading.
CEO Mark Zuckerberg emphasized the company’s robust investment in computing power to support the training of AI models, the growth of its core business, the development of personal AI assistants, and the creation of AI services tailored for enterprise clients. Despite the considerable initial expenditures, Zuckerberg expressed confidence that Meta is strategically positioned to transform AI into a significant long-term revenue driver.
In terms of financial results, Meta reported earnings per share of $6.18, falling short of analysts’ projections of $7.22. Nonetheless, the company saw its quarterly revenue grow by 28% year-over-year, reaching $60.8 billion, buoyed by strong performance in its advertising sector. Looking ahead, Meta anticipates capital expenditures of $130 billion to $145 billion in 2026, increasing the lower threshold of its previous estimates as it continues to enhance AI infrastructure and data center capacity.
Alongside its financial undertakings, Meta is also navigating legal hurdles, including lawsuits concerning youth safety on its social media platforms. The company noted that legal expenses and restructuring costs contributed to the pressure on operating income during the quarter. Despite these challenges and increased spending, Meta reported an increase in daily active users across its applications, rising to 3.6 billion, indicating sustained growth in user engagement.