Meta Faces Cash Flow Crisis Amid Expensive AI Overhaul

Meta Platforms reported a staggering 91% decline in free cash flow, highlighting the financial burden of its extensive AI investments. Despite uncertain returns, the company forecasts greater expenditure in the coming years, raising concerns among investors and causing a dip in its stock value.

Meta Platforms reported a staggering 91% decline in free cash flow, highlighting the financial burden of its extensive AI investments. Despite an uncertain payoff, the social media giant faces increasing financial strain. Free cash flow plummeted to $784 million in the second quarter, a stark contrast to the $8.55 billion reported a year ago.

The company's stock fell about 5% during extended trading hours. This downturn echoes Alphabet's recent financial woes after it too reported significant negative cash flow from its hefty expenditures. Alphabet's stock was not spared, facing a similar decline.

Looking ahead, Meta expects capital expenditure in 2026 to range between $130 billion and $145 billion. It has also adjusted its overall expense outlook to account for legal charges recognized last quarter. The updated forecast suggests a full-year 2026 total expense range of $165 billion to $169 billion.