Meta Platforms has experienced a significant 91% decline in free cash flow year-over-year during the second quarter, underscoring the financial strain of its substantial investments in artificial intelligence infrastructure. For the quarter ending June 30, the company reported free cash flow of $784 million, a sharp drop from the previous year’s $8.55 billion. This financial downturn led to a decrease in Meta’s share price in after-hours trading.
CEO Mark Zuckerberg emphasized Meta’s heavy investments in computing power to support the training of AI models, the expansion of its core business, the development of personal AI assistants, and the creation of AI services targeted at enterprise customers. Despite the steep initial costs, Zuckerberg expressed confidence in Meta’s strategic positioning to transform AI into a significant long-term business opportunity.
While Meta’s earnings per share fell short of analysts’ expectations, coming in at $6.18 compared to the anticipated $7.22, the company did enjoy a 28% increase in quarterly revenue, reaching $60.8 billion. This growth was largely fueled by the sustained strength of its advertising business. Looking ahead, Meta anticipates capital expenditures to range between $130 billion and $145 billion by 2026, as it continues to expand its AI infrastructure and data center capacity.
In addition to financial challenges, Meta is grappling with ongoing legal issues, including lawsuits concerning the safety of youth on its social media platforms. The company disclosed that legal expenses and restructuring costs negatively impacted its operating income during the quarter.
Despite the increased spending, Meta reported a rise in daily active users across its apps, reaching 3.6 billion. This figure indicates ongoing growth in user engagement, reflecting the company’s resilience and adaptability in navigating both financial and legal hurdles.