Meta Cash Flow Sinks as Zuckerberg Doubles Down on AI
Meta raised 2026 spending plans after a $2.4 billion legal charge and $31 billion in quarterly capital spending drove free cash flow to $784 million.
- On Wednesday, Meta Platforms reported a 91% drop in free cash flow to $784 million in the second quarter, down from $8.55 billion a year earlier, reflecting the financial strain of its costly AI buildout.
- Revenue rose 28% to $60.8 billion, beating forecasts, yet profit fell 14% to $15.8 billion as operating margin declined to 31% from 43% a year earlier, revealing the high cost of aggressive AI investment.
- Meta raised 2026 capital expenditure guidance to between $130 billion and $145 billion, while booking $2.4 billion in legal charges and $1.18 billion in severance from the May layoff of about 8,000 staff.
- Shares dropped about 5% in extended trading after the report, while Alphabet reported negative free cash flow for the first time last week after spending $5.9 billion in the second quarter.
- Reality Labs lost another $4.6 billion, bringing its total losses past $80 billion, even as Meta established a $14 billion data-center venture with BlackRock to support long-term infrastructure needs.
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