Meta Shares Fall 10% as Q3 Revenue Outlook Misses Wall Street
In brief
- Meta shares fell 10% in premarket trading following earnings miss
- Q3 revenue guidance of $61–$64 billion missed Wall Street consensus
- Annual capex forecast raised to $130 billion for AI infrastructure
- Free cash flow plunged to $784 million from $8.55 billion YoY
- Heavy investment in AI model training, personal agents, and data centers
Earnings Shortfall Across the Board
Meta's second-quarter revenue reached $60.8 billion, yet second-quarter earnings per share missed expectations at $6.18. Net income fell to $15.85 billion, though daily active people totaled 3.6 billion, slightly below forecasts. The miss on user growth signals a slowdown in one of Meta's core metrics.
The cash flow picture deteriorated sharply. Free cash flow plunged to $784 million from $8.55 billion a year earlier, reflecting higher AI-related spending. That's a 91% decline year-over-year — a stark indicator of how much capital Meta is now channeling into its AI buildout.
Capital Spending Surge Ahead
Meta's pivot toward AI infrastructure is unmistakable. The company raised the lower end of its annual capital expenditure forecast to $130 billion as it expands AI infrastructure. This marks a substantial commitment to computing capacity.
Meta said it is investing heavily in AI model training, personal AI agents and new data centers. To offset some of these costs, the company is exploring opportunities to generate revenue by leasing excess computing capacity to third parties. That strategy could help monetize idle infrastructure — but it's still a speculative bet on future returns.
