Meta Platforms has reported a significant drop in free cash flow for the second quarter, with a 91% decline compared to the same period last year, underscoring the financial strain of its substantial investments in artificial intelligence infrastructure. The company disclosed free cash flow of $784 million for the quarter ending June 30, a steep decrease from the $8.55 billion recorded a year earlier, which contributed to a dip in Meta’s share price during after-hours trading.

According to Chief Executive Officer Mark Zuckerberg, the company is channeling substantial investment into computing power essential for training AI models, expanding its core operations, and developing personal AI assistants, alongside building AI services aimed at enterprise customers. Zuckerberg expressed confidence that despite the significant initial costs, Meta is strategically positioned to leverage AI as a major long-term business opportunity.

In terms of earnings, Meta reported $6.18 per share, falling short of analysts’ expectations, which were set at $7.22. Nevertheless, the company experienced a 28% increase in quarterly revenue, reaching $60.8 billion, largely driven by sustained strength in its advertising sector. Looking ahead, Meta anticipates capital expenditures of between $130 billion and $145 billion by 2026, adjusting the lower spectrum of its previous forecast as it continues to enhance its AI infrastructure and data center capabilities.

Meta faces ongoing legal challenges, including lawsuits concerning youth safety on its social media platforms, which the company cited as factors impacting operating income due to legal expenses and restructuring costs. Despite these financial pressures, Meta reported an increase in daily active users across its suite of apps, reaching 3.6 billion, indicating continued growth in user engagement.