Meta Posts 28% Revenue Gain as AI Spending Squeezes Cash Flow

Overview

• Meta reported second-quarter revenue of $60.80 billion, a 28% year‑over‑year increase driven by stronger ad impressions, higher ad prices, and daily active users of 3.6 billion.
• The company disclosed that total costs rose 55% to $42.03 billion, including $2.40 billion in legal charges and $1.18 billion in severance tied to May workforce reductions.
• Heavy AI infrastructure investment pushed capital expenditures to $31.08 billion in the quarter and cut free cash flow to roughly $780 million from $8.55 billion a year earlier.
• Reality Labs lost $4.62 billion in the quarter and Meta raised full‑year expense and capex guidance while giving slightly softer Q3 revenue guidance, which prompted the stock to fall further after the release on Wednesday.
• About 8,000 employees were affected by the May cuts and most are expected to leave in the third quarter, and analysts now want proof that the expanded AI data centers and chips will generate stronger cash returns over time.