Meta Burns Through $31 Billion as Massive AI Spending Hits Free Cash Flow

Meta shares dropped up to 7.45 percent after the company released its second quarter earnings report. Revenue reached $60.80 billion, beating the $60.17 billion expected by analysts, and daily active people hit 3.6 billion. However, earnings per share missed expectations at $6.18, and net income slipped to $15.85 billion from $18.34 billion a year earlier. Guidance for the current quarter also came in soft.

The real story of the quarter was the massive surge in spending on artificial intelligence infrastructure. Capital expenditures hit $31.1 billion, which is a jump of more than 50 percent from the prior quarter. Because of this heavy spending, free cash flow plunged to just $784 million, down sharply from $12.4 billion in the first quarter. Meta also raised the low end of its full year capital expenditure guidance to a range of $130 billion to $145 billion, showing that its infrastructure buildout will continue at a rapid pace.

Despite the cash burn, the core advertising business remains strong with ad impressions rising 14 percent year over year and average ad prices climbing 12 percent. Meta also closed the quarter with $90.3 billion in cash and marketable securities on its balance sheet. Investors are now weighing whether strong ad revenue and future growth will eventually justify the heavy spending spree.