Meta Free Cash Flow Plummets Amid Massive AI Spending

Meta Platforms reported second-quarter financial results for the period ending June 30, highlighted by a 91% collapse in free cash flow to $784 million. This marks the lowest level of free cash flow for the company since late 2022. While revenue reached $60.8 billion and exceeded expectations, earnings per share of $6.18 missed analysts' estimates of $7.22.

The financial decline is primarily driven by aggressive AI infrastructure investments, with second-quarter capital expenditures totaling approximately $31.08 billion. Additionally, the company's Reality Labs division recorded an operating loss of $4.53 billion. Despite these losses and a nearly 10% drop in share value during after-hours trading, the company raised the low end of its full-year capital spending outlook to $130 billion.

CEO Mark Zuckerberg defended the expenditure as a strategic necessity to develop personal AI agents and commercialize technology at scale. He stated the goal is to create new business lines beyond the company's traditional advertising model.