Meta Platforms has experienced a significant drop in its free cash flow, reporting a 91% decline year-over-year for the second quarter. The company disclosed a free cash flow of $784 million for the quarter ending June 30, a stark contrast to the $8.55 billion reported in the same period the previous year. This substantial decrease has led to a fall in Meta’s stock price during after-hours trading.
CEO Mark Zuckerberg attributed the financial downturn to the company’s aggressive investments in artificial intelligence infrastructure. Meta is channeling substantial resources into enhancing its computing power to facilitate AI model training, expanding its core operations, and developing AI-driven personal assistants, along with AI services tailored for enterprise clients. Zuckerberg remains optimistic, asserting that despite the initial high costs, Meta is strategically positioned to leverage AI as a significant long-term business opportunity.
Despite missing analysts’ expectations with earnings per share of $6.18 compared to the forecasted $7.22, Meta’s quarterly revenue saw a 28% increase, reaching $60.8 billion. This growth is largely attributed to the robust performance of its advertising sector. Looking ahead, the company has revised its capital expenditure forecast for 2026, anticipating spending between $130 billion and $145 billion as it continues to expand its AI infrastructure and data center capacities.
The tech giant also faces ongoing legal hurdles, including lawsuits concerning youth safety on its social media platforms. These legal expenses, along with restructuring costs, have further impacted Meta’s operating income for the quarter. Nonetheless, the company reported an increase in user engagement, with daily active users across its applications rising to 3.6 billion, indicating sustained user growth despite the financial challenges.