Meta Platforms (NASDAQ:META) shares dropped nearly 10% after it announced an increase in artificial intelligence (AI) spending despite reporting a 28% revenue growth in Q2 2026, amounting to $61 billion. However, net income decreased by 14% to $6 billion. The company raised its capital expenditure forecast for 2026 to between $130 billion and $145 billion due to investments in AI infrastructure. This additional spending aims to enhance AI models, data centers, and create new AI-powered products, albeit leading to a decline in free cash flow to its lowest in five years at $784 million. Investors are concerned about the spending pace and the anticipated returns.

Oops, something went wrong

Skip to navigation Skip to main content Skip to right column

Zuckerberg's AI Gamble Sends Meta Shares Tumbling

Nauman Khan

Thu, July 30, 2026 at 12:26 PM EDT1 min read

META \ -7.95%

This article first appeared on GuruFocus.

Meta Platforms ( NASDAQ:META) shares fell about 10% on Thursday morning after the Facebook and Instagram parent increased its artificial intelligence spending plans despite reporting double-digit revenue growth.

Meta reported second-quarter revenue of $61 billion, up 28% from a year earlier, while net income declined 14% to $6 billion. The company also raised its 2026 capital expenditure forecast to between $130 billion and $145 billion, up from its prior outlook of $125 billion, as it continues expanding AI infrastructure.

Meta said the additional investment will support AI models, data centers and new AI-powered products. Executives said the company expects future returns from offering AI tools and application programming interface (API) services to businesses, while AI features are also driving engagement across Facebook and Instagram and improving advertising capabilities for marketers.

The increased spending comes as Meta's free cash flow fell to $784 million, its lowest level in at least five years, reflecting higher infrastructure costs tied to AI expansion. Investors appeared concerned about the pace of spending and the timeline for generating meaningful returns, drawing comparisons with broader market scrutiny over large AI investments.

View Comments

Terms and Privacy Policy

Your Privacy Choices

More Info

Try AlphaSpace

Read Original at Yahoo Finance →