Meta Q2 profit falls as AI spending slashes cash flow

Meta Platforms reported a sharp decline in profitability and free cash flow for the second quarter of 2026, as massive investments in artificial intelligence infrastructure consumed nearly all the cash generated by its core advertising business. The company's shares fell sharply in after-hours trading following the announcement on Wednesday, July 29.

For the quarter ended June 30, Meta's revenue grew 28% year-over-year to $60.8 billion, a pace not seen since late 2021. However, net income fell 14% to $15.85 billion, and earnings per share of $6.18 missed analyst expectations. The company's free cash flow plummeted 91% to just $784 million, down from $8.55 billion a year earlier, as capital expenditures surged to $31.08 billion.

The dramatic drop in cash flow underscores the financial strain of Meta's aggressive AI buildout. The company now expects its total capital expenditures for 2026 to be between $130 billion and $145 billion, raising the lower end of its forecast for the second time this year. This spending is primarily directed toward constructing data centers and acquiring the computing power necessary for AI development. Meta plans to double its overall computing...