Meta Platforms reported a sharp decline in second quarter free cash flow as the company accelerated spending on artificial intelligence infrastructure, highlighting the mounting cost of its AI ambitions despite continued strength in its advertising business.
According to Reuters, the Facebook and Instagram parent posted free cash flow of $784 million for the quarter ended June 30, down 91% from $8.55 billion a year earlier. The result sent Meta’s shares down about 10% in extended trading as investors reacted to the scale of the cash drain.
Meta reported earnings per share of $6.18, missing analysts’ average estimate of $7.22, although quarterly revenue rose 28% to $60.8 billion, marking one of the company’s fastest rates of growth in recent years. Daily active users across Meta’s apps increased 3% year on year to 3.6 billion.
Chief Executive Mark Zuckerberg defended the company’s heavy investment in AI, saying Meta expects a significant share of its computing capacity to support training advanced AI models, expanding its core business and developing personal AI assistants and enterprise services. He argued that the spending reflects Meta’s long term belief that AI will become a major consumer and commercial platform.
Meta now expects capital expenditure for 2026 to range between $130 billion and $145 billion, raising the lower end of its previous forecast. The company plans to continue expanding its data centre network and computing capacity to support AI development.
The company also continues to face legal and regulatory pressure. Reuters reported that Meta warned ongoing investigations and lawsuits related to youth safety, along with restructuring costs tied to its AI strategy, could continue affecting its financial performance. The company said operating income would have increased without legal charges and severance costs, but instead declined during the quarter.
Despite the weaker earnings, analysts noted that Meta’s advertising business remains resilient and continues to generate the revenue needed to fund its aggressive AI investments, even as investors question how quickly those investments will translate into profits.
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