Meta Platforms Inc.’s shares fell more than 8% in after-hours trading after the company reported its fiscal 2026 second quarter results. While the social networking company beat revenue expectations for the quarter ending June 30, it missed badly on earnings as costs rose 55%. Diluted earnings per share dropped to $6.18 from $7.14, and overall profit fell by 14%.
The company's costs rose more steeply than revenue growth as it continues to invest heavily in artificial intelligence. This transition from a social media app maker into an AI company has led to an infrastructure buildout that has significantly impacted the company's finances.
As a result of this AI spending, free cash flow has fallen to less than $1 billion, marking its lowest level since the third quarter of 2022. These financial pressures, combined with a disappointing revenue forecast for the current quarter, have intensified investor concerns regarding the company's unprecedented spending on artificial intelligence.