Meta Platforms has experienced a substantial 91% drop in its free cash flow for the second quarter compared to the previous year, a reflection of the financial strain from its extensive investment in artificial intelligence infrastructure. The social media giant reported a free cash flow of $784 million for the quarter ending June 30, a significant decline from the $8.55 billion recorded a year ago. This financial downturn had immediate repercussions, leading to a decrease in Meta’s stock price during after-hours trading.
Chief Executive Officer Mark Zuckerberg emphasized the company’s commitment to investing in computing power necessary for training AI models, expanding its core operations, creating personal AI assistants, and developing AI services tailored for enterprise clients. Despite the substantial initial costs, Zuckerberg remains confident that Meta is strategically positioned to capitalize on AI as a pivotal long-term business opportunity.
Financially, Meta reported earnings per share of $6.18, which fell short of analysts’ predictions of $7.22. However, the company did see a 28% rise in quarterly revenue year-over-year, reaching $60.8 billion. This growth was largely driven by the ongoing strength of its advertising sector. Looking ahead, Meta anticipates capital expenditures to range between $130 billion and $145 billion by 2026, as it continues to enhance its AI infrastructure and data center capabilities.
In addition to financial challenges, Meta is navigating various legal issues, including lawsuits concerning youth safety on its social media platforms. The company noted that legal expenses, along with restructuring costs, adversely affected its operating income during this period. Nevertheless, the company reported an increase in user engagement, with daily active users across its suite of applications rising to 3.6 billion.