Meta Platforms stock slumped in after-hours trading, losing $43.61 or 7.45% to $542, after the Instagram, WhatsApp and Facebook parent reported that free cash flow plunged 91% year‑on‑year to $784 million in the second quarter.
Put simply, the latest three-month financials revealed the cash strain from Meta's AI investments. It follows recent news that Zuckerberg's platform was launching a business to resell compute resources that had originally been earmarked for Meta's own AI demand yet had not materialised.
Revenue was up 28% to $60.8 billion, with most sales still generated by advertising even as the company shifts capital toward servers, chips and other infrastructure.
“We expect that a significant portion of our compute is going to go towards training our models, growing our core business and delivering personal agents and new products,” CEO Mark Zuckerberg said on the earnings call following the results.
Meta also reported on its data center rollout, noting that it had 32 data centres in operation or under construction, with 28 of them in the US, a footprint that underpins its increased capital intensity.
Investors reacted sharply, sending shares down 10% at one point during in the extended trading hours, and analysts noted the cash‑flow trough is the lowest in nearly four years as the industry pursues costly AI buildouts.
The company also flagged a lacklustre third‑quarter revenue forecast, while continuing moves to sell AI tools to other companies as it seeks new monetisation paths for its models.
