Meta AI Spending Sends Quarterly Free Cash Flow Down 91%
Meta Platforms is pouring money into data centers, chips and computing capacity as it seeks to keep pace in the race to develop advanced artificial intelligence. Its Facebook, Instagram and WhatsApp advertising businesses still generate substantial cash, but investors are increasingly focused on whether those earnings can finance Chief Executive Mark Zuckerberg’s superintelligence ambitions without prolonged pressure on margins and shareholder returns.
Meta said on July 29 that second-quarter revenue rose 28% to $60.8 billion, while capital expenditures climbed 83% to about $31.1 billion in the three months ended June 30, 2026. Free cash flow plunged 91% to $784 million from $8.55 billion a year earlier, its lowest level in four years. The company raised its 2026 capital-spending forecast to $130 billion to $145 billion, and its shares fell as much as about 7% in after-hours trading.
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The history behind this eventMeta’s Higher AI Spending Outlook Rattles Investors, Shares Tumble After Earnings
Meta is using cash flow from its advertising business to fund its generative AI push and has launched a new model, Muse Spark. But the high cost of data centers, chips and computing infrastructure has made the potential payoff from increased capital expenditure a key metric for investors assessing the company.
Meta reported a 33% year-over-year increase in revenue in its first-quarter 2026 results and raised the upper end of its full-year AI capital expenditure forecast to $145 billion. Although revenue and profit beat market expectations, the heavy spending fueled concerns about pressure on margins. The shares tumbled after the results and were down more than 8% at one point in premarket trading.
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