Meta Platforms has reported a significant 91% drop in free cash flow for the second quarter compared to the previous year, primarily due to substantial investments in artificial intelligence infrastructure. For the quarter ending June 30, the company announced a free cash flow of $784 million, a stark decrease from the $8.55 billion recorded a year earlier. This financial downturn led to a decline in Meta’s share price during after-hours trading.
Despite the sharp decline in free cash flow, Meta’s CEO, Mark Zuckerberg, emphasized the company’s commitment to investing heavily in computing power to advance AI models. These investments aim to expand Meta’s core business, develop personal AI assistants, and create AI services for enterprise customers. Zuckerberg remains optimistic about the company’s ability to transform AI into a significant long-term business venture, despite the initial high costs involved.
Meta’s earnings per share fell short of expectations, reporting $6.18 compared to analysts’ predictions of $7.22. Nevertheless, the company experienced a 28% increase in quarterly revenue, reaching $60.8 billion, driven by a robust performance in its advertising segment. Looking ahead, Meta anticipates capital expenditures of between $130 billion and $145 billion by 2026, adjusting the lower end of its previous forecast as it continues to enhance its AI infrastructure and data center capabilities.
In addition to financial challenges, Meta is navigating legal hurdles, including lawsuits focused on youth safety on its social media platforms. The company acknowledged that legal expenses and restructuring costs impacted its operating income for the quarter. Despite these financial strains, Meta reported an increase in user engagement, with daily active users across its applications rising to 3.6 billion.