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.