Meta Shares Drop on Weak Forecast, Heavy AI Spending — SkimNews
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- Meta reported second-quarter earnings per share of $6.18, missing analyst estimates of $7.22, and revenue of $60.80 billion versus $60.17 billion expected.
- Meta forecast third-quarter revenue between $61 billion and $64 billion, falling short of the $63.15 billion analysts anticipated, with foreign currency as a 1% headwind.
- Meta narrowed its annual capital expenditure guidance to $130 billion–$145 billion, up from prior spending and reflecting aggressive investment in AI infrastructure.
- Meta's free cash flow dropped to $784 million from $8.55 billion a year earlier, as AI investments and data center expansion drained liquidity.
- Meta CEO Mark Zuckerberg announced plans to lease excess compute capacity to third parties, citing offers 'at a significant premium' over cost.
- Meta's Reality Labs unit posted $4.6 billion in operating losses on $431 million in sales, outperforming Wall Street's loss expectation of $5.07 billion.
Why it matters: Meta’s sharp drop in free cash flow and lighter revenue guidance signal that its massive AI spending is straining near-term profitability, even as it seeks new revenue by leasing compute — a strategic shift with tangible financial trade-offs now visible in its results.
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