Meta Platforms’ second-quarter free cash flow fell 91% to $784 million as chief executive Mark Zuckerberg defended the company’s expanding investment in AI infrastructure, model training and new products.
Free cash flow declined from $8.55 billion a year earlier and reached its lowest level since late 2022. Meta shares fell 10% in extended trading after the results, despite second-quarter revenue rising 28% to $60.8 billion. Daily active people across the company’s apps increased 3% year over year to 3.6 billion.
Meta also raised the lower end of its 2026 capital expenditure outlook. The company now expects capital expenditure of between $130 billion and $145 billion, compared with its previous forecast of $125 billion to $145 billion. At the beginning of the year, Meta had projected spending of between $115 billion and $135 billion.
The company expects to spend as much as $145 billion on AI infrastructure this year, about double last year’s investment. Zuckerberg said a significant proportion of Meta’s computing capacity would support model training, growth in the core business, personal agents and new products. He also said the company expected to build a large business serving major customers.
Zuckerberg presented personal AI agents as a potentially significant consumer business and argued that Meta was positioned to commercialise the technology at scale. The investment programme therefore extends beyond improvements to Facebook and Instagram and depends partly on Meta creating new sources of revenue from AI.
The results placed Meta alongside other technology groups facing investor scrutiny over the cash demands of AI infrastructure. Alphabet reported its first cash-flow-negative quarter, while Microsoft’s free cash flow fell 23% in the June quarter. Microsoft shares nevertheless rose 4.4% in aftermarket trading as growth in its cloud business eased concerns about the pace of spending.
Meta reported earnings per share of $6.18, below the average analyst estimate of $7.22. Chief financial officer Susan Li said second-quarter operating income would have increased 9% year over year without legal charges and severance expenses. Operating income instead fell 8%.
The severance costs followed a restructuring intended to reorganise the company around AI. Meta laid off about 10% of its workforce, or around 8,000 employees, in May. Reality Labs has also recorded more than $80 billion in operating losses, while Meta remains almost entirely dependent on advertising revenue.
Mike Proulx, a senior executive at Forrester, said Meta’s AI spending had become harder to support as the costs became more visible in its financial results. He said the company believed AI could create businesses beyond improvements to its existing platforms.
Luke Stillman, managing director at Madison and Wall, said Meta’s underlying advertising business remained the operation financing the wider investment programme.
Legal exposure adds another pressure to Meta’s financial planning. The company said in a court filing this month that four states were seeking $1.4 trillion in penalties over allegations that Facebook and Instagram were designed to addict young users and that the public had been misled about their safety.
Meta warned in April that legal and regulatory action in the European Union and the United States over youth social media issues could significantly affect its business and financial results. Susan Li also said the company continued to face youth-related scrutiny in several markets and had several related trials scheduled in the United States this year that could result in a material loss.
Meta’s higher capital expenditure range, legal charges, severance costs and continuing Reality Labs losses place greater weight on the advertising business’s ability to finance the AI programme while preserving cash generation.
