Key facts
- Meta Platforms reported a 91% year-over-year drop in free cash flow for Q2 2026.
- Meta's free cash flow was $784 million in Q2 2026.
- Meta's capital expenditures for AI infrastructure surged 83% to $31.08 billion in Q2 2026.
- Meta narrowed its 2026 capital expenditure forecast to $130 billion-$145 billion.
- Meta's stock fell nearly 10% in after-hours trading after Q2 earnings.
- Meta CEO Mark Zuckerberg stated AI is enhancing apps and advertising.
- Global time spent on Instagram increased by double digits year-over-year due to AI.
- Arm Holdings projected second-quarter revenue above Wall Street estimates.
- Microsoft reported a $3.2 billion gain from its Anthropic investment.
- Microsoft recorded a $600 million markdown on its OpenAI investment.
Meta Platforms reported a significant 91% year-over-year drop in free cash flow, reaching $784 million for the second quarter of 2026. This decline is largely attributed to an 83% surge in capital expenditures for AI infrastructure, which totaled $31.08 billion. The company has also narrowed its 2026 capital expenditure forecast to a range of $130 billion to $145 billion, an upward revision from its previous $125 billion to $145 billion estimate. This adjustment reflects substantial investments in data centers aimed at expanding AI computing power.
Despite the substantial costs associated with its AI buildout, Meta's AI initiatives are positively impacting its advertising revenue. CEO Mark Zuckerberg highlighted AI's crucial role in enhancing the performance of its applications and the overall advertising business. He specifically noted that global time spent on Instagram increased by double digits year-over-year, a growth primarily driven by AI-powered improvements in feed and Reels recommendations. Meta plans to extend these AI efforts to its Facebook platform as well. Following these financial reports, Meta's stock experienced a nearly 10% drop in after-hours trading, as the company's earnings per share fell below Wall Street estimates, even though revenue slightly exceeded expectations.
In related technology sector news, Arm Holdings projected second-quarter revenue to surpass Wall Street estimates, driven by strong demand for its energy-efficient chip designs that power AI data centers. This positive outlook from Arm follows Microsoft's Azure cloud growth, which also exceeded expectations, suggesting a potential easing of concerns regarding AI infrastructure spending. Microsoft itself reported a $3.2 billion gain from its investment in Anthropic during its fiscal fourth quarter, which contributed 33 cents to its earnings per share. However, Microsoft also recorded a $600 million markdown on its investment in OpenAI, which reduced its earnings per share by 7 cents.