Meta shares plummeted more than 11% in extended trading on Wednesday after the company issued a weaker-than-expected revenue forecast and took a big hit to its cash pile.
Meta said it expects revenue this quarter of between $61 billion and $64 billion, or $62.5 billion at the middle of the range, versus analyst expectations of $63.15 billion, according to LSEG. The company said the guidance "assumes foreign currency is an approximately 1% headwind to year-over-year total revenue growth, based on current exchange rates."
Daily active people, or DAP, which measures users across Meta's family of apps, came in at 3.6 billion, trailing Wall Street estimates of 3.61 billion, according to StreetAccount.
For capital expenditures, Meta narrowed its guidance for the year to between $130 billion and $145 billion from a prior range of $125 billion to $145 billion. With Meta pouring money into artificial intelligence infrastructure, free cash flow dwindled to $784 million in the quarter from $8.55 billion a year earlier.
Meta shares are down 11% for the year as of Wednesday's close, while the Nasdaq is up about 5% over that stretch.
AI push and data center spending
Investors are watching Meta's efforts to more directly monetize its AI-related work. Earlier this month, Meta debuted the Muse Spark 1.1 model, which AI chief Alexandr Wang said represents the "strongest model for agentic and coding work yet" at a cheaper price than offerings from OpenAI and Anthropic. The company has aggressively invested in a new AI strategy since hiring Wang in June 2025 in a deal that involved a $14.3 billion investment in Scale AI, Wang's startup.
"Overall, we expect that a significant portion of our compute is going to go towards training our models, growing our core business, and delivering personal agents and new products," Meta CEO Mark Zuckerberg said on Wednesday's earnings call. "But we also expect to grow a large business serving large customers as well."
Last week, rival Alphabet reported that free cash flow turned negative for the first time on record due to heavy AI spending. Unlike Alphabet and fellow hyperscalers Amazon and Microsoft, Meta doesn't have a thriving cloud-computing business, though that could change as Meta looks to lease out excess capacity to third parties. "We're getting a lot of offers for compute at a significant premium over what we paid for it," Zuckerberg said.
On Tuesday, Meta announced a venture with BlackRock to build a $14 billion data center project in El Paso, Texas, weeks after disclosing that its Hyperion data center project in rural Louisiana would cost over $50 billion. Earlier in July, Meta revealed plans for a $9 billion data center in Alberta, Canada.
Costs and earnings details
- Second-quarter total costs and expenses reached $42.03 billion, up 55% from a year ago, including $2.4 billion of legal charges and $1.18 billion of severance expenses tied to layoffs that began in May.
- Finance Chief Susan Li said that excluding those charges, operating income would have increased 9% year over year.
- Net income slid to $15.85 billion, or $7.14 per share, from $18.34 billion in the same quarter last year.
- Meta's Reality Labs unit generated $4.6 billion in second-quarter operating losses on $431 million in sales, better than Wall Street's expected loss of $5.07 billion on revenue of $423.4 million.
Source: CNBC
