Meta Platforms has experienced a significant drop in its free cash flow, reporting a 91% decline on a year-over-year basis for the second quarter. This downturn underscores the financial impact of the company’s substantial investments in artificial intelligence infrastructure. For the quarter that concluded on June 30, Meta’s free cash flow plummeted to $784 million from $8.55 billion in the same period last year, a sharp decrease that led to a fall in the company’s share price during after-hours trading.
CEO Mark Zuckerberg emphasized Meta’s substantial investment in enhancing computing power necessary for training AI models. These efforts are directed towards expanding the company’s core business, developing personal AI assistants, and creating AI services tailored for enterprise clients. Despite the hefty initial costs, Zuckerberg is confident that AI will become a significant long-term business opportunity for Meta.
While Meta’s earnings per share fell short of analysts’ predictions—posting $6.18 instead of the expected $7.22—the company did report a 28% increase in quarterly revenue, reaching $60.8 billion. This growth was largely driven by strong performance in its advertising sector. Looking ahead, Meta has projected capital expenditures to range between $130 billion and $145 billion by 2026, adjusting the lower end of its previous forecast as it continues to expand its AI infrastructure and boost data center capacity.
The company is also navigating legal pressures, with ongoing lawsuits concerning youth safety on its social media platforms. During the quarter, legal expenses and restructuring costs adversely affected Meta’s operating income. Nevertheless, the company witnessed a rise in user engagement, with daily active users across its suite of applications climbing to 3.6 billion.