Meta Q2 revenue up 28% as AI spend fuels stock slide

Meta Platforms reported strong revenue growth for the second quarter but saw its stock fall sharply as investors reacted to the immense cost of its artificial intelligence ambitions and a revenue forecast that fell short of expectations. The company announced on Wednesday, July 29, that it had raised the lower end of its full-year capital expenditure forecast to a range of $130 billion to $145 billion, signaling an unwavering commitment to building AI infrastructure despite the financial strain.

For the quarter ended June 30, revenue rose 28% year-over-year to $60.8 billion, slightly above analyst estimates. Advertising revenue accounted for $59.36 billion of that total, with ad impressions and average prices both increasing. However, the heavy spending on AI is reshaping the company's financial profile. Capital expenditure for the quarter hit $31.08 billion, causing free cash flow to plummet to $784 million from $8.55 billion a year earlier. Operating income declined 8% to $18.78 billion, and net income fell 14% to $15.85 billion.

In a call with investors, Chief Executive Mark Zuckerberg framed the spending as a strategic necessity, stating that computing infrastructure has...