Meta Platforms, the parent company of Facebook and Instagram, saw its second-quarter revenue jump 28% compared to the same period a year earlier, reaching $60.8 billion. This growth was fueled by a combination of rising ad volumes and higher pricing across the company's platforms. Despite the strong revenue performance, the majority of the $31.9 billion in operating cash flow generated during the quarter was used to fund capital expenditures, as Meta accelerates its investments in artificial intelligence infrastructure.
Free cash flow, which is calculated by subtracting capital spending from operating cash flow, plummeted to just $784 million in the second quarter. This was down sharply from $8.5 billion in the second quarter of the previous year. Meta spent $31.1 billion on capital expenditures during the period, leaving nearly nothing in free cash flow. The breakdown shows $30.1 billion was allocated to property and equipment purchases, with an additional $962 million used for principal payments on finance leases.
The pace of capital spending has increased significantly compared to earlier in the year. In the first quarter, Meta’s capital expenditures were $19.8 billion, and this surged to $31.1 billion in the second quarter, marking an increase of over 50%. The sharp rise in spending contributed to a dramatic drop in free cash flow, which fell from $12.4 billion in Q1 to just $784 million in Q2. While operating cash flow remained relatively steady at $32.2 billion in Q1 and $31.9 billion in Q2, the rapid acceleration in capital expenditures has shifted the financial narrative.
The primary focus of the capital spending is the development of data centers, a crucial element in supporting Meta’s growing artificial intelligence projects. Earlier in the year, the company had attributed rising costs to higher pricing for components and the need for additional data centers to support future demand. The most recent report from Meta now pushes its 2026 capital expenditure forecast to a range of $130 billion to $145 billion, marking the second time this year the company has raised its spending projections. By June, the company had already allocated $50.9 billion in capital expenditures for the year.
Despite the healthy revenue growth, Meta’s net income declined 14% year over year to $15.8 billion. Earnings per share also dropped by 13% to $6.18. A key driver of this decline was an increase in legal charges totaling $2.4 billion, which contributed to the upward revision of the company’s full-year expense forecast to between $165 billion and $169 billion.
Nonetheless, Meta’s operational performance remains strong. Ad impressions grew by 14% year over year, while the average price per ad increased by 12%. The company’s platforms also achieved a record 3.60 billion daily active users in June, up 3% compared to the previous year. These metrics underscore the continued strength of Meta’s user base and advertising capabilities.
The company also ended the quarter with a robust cash position of $90.3 billion in cash and marketable securities. This financial buffer provides reassurance even as the company continues to ramp up its spending on infrastructure projects.
However, investors remain cautious about the returns from these investments. Shares of Meta dropped roughly 6% in after-hours trading following the earnings report, and the stock currently trades at approximately 20 times earnings. This valuation is below the broader S&P 500’s multiple of about 28, and while some investors see this as a reasonable price for a business growing revenue at 28% annually, others remain skeptical due to the uncertainty around the long-term returns on infrastructure spending.
In summary, Meta is managing strong revenue growth while simultaneously investing aggressively in its future. The company’s balance sheet remains resilient, and the current valuation may offer an opportunity for investors who believe in the long-term potential of Meta’s artificial intelligence and advertising strategies.