Meta shares tumble as free cash flow nosedives

(Sharecast News) - Meta Platforms shares tumbled in premarket trading on Thursday after the Facebook and Instagram owner reported a sharp fall in second-quarter free cash flow and issued weaker-than-expected revenue guidance as spending on artificial intelligence infrastructure surged. Revenue rose 28% year-on-year to $60.8bn, ahead of expectations, but net income fell 14% to $15.85bn and earnings of $6.18 per share missed forecasts of $7.22.

Free cash flow plunged 91% to $784m from $8.55bn a year earlier, while total costs and expenses jumped 55% to $42.03bn, including $2.4bn of legal charges and $1.18bn of severance costs.

Meta forecast third-quarter revenue of $61bn to $64bn, below expectations at the midpoint, and narrowed its 2026 capital expenditure outlook to $130bn to $145bn from $125bn to $145bn as chief executive Mark Zuckerberg continued to back heavy investment in AI infrastructure and personal AI agents.

"I get that this is a big investment and it's a big bet," Zuckerberg said.

"We see the technology working. We're happy with the trajectory of the lab.

"I'm excited about the products that are coming. And we believe that this is going to be a big thing."

At 0743 EDT (1243 BST), shares in Meta Platforms were down 9.33% in premarket trading in New York at $531.00.

Reporting by Josh White for Sharecast.com.