Meta reported diluted earnings per share of $6.18 for the fiscal second quarter ended June 30, down from $7.14 in the year-ago period, as costs rose 55%1. The company's shares fell more than 8% in after-hours trading.
Meta beat revenue expectations for the quarter but missed on earnings. The cost surge drove profit down 14%, with AI-related spending consuming nearly all of the company's free cash flow. Meta's free cash flow fell to its lowest level in nearly four years2.
ANALYSIS The scale of the cost increase — 55% — and its direct impact on both earnings and free cash flow underscore the financial weight of Meta's AI infrastructure buildout. A company that beat on revenue yet saw profit contract by double digits and free cash flow compress to a multi-year low is absorbing AI capital expenditures at a pace that is materially reshaping its financial profile.
The after-hours share decline of more than 8% suggests investors are weighing the near-term earnings drag from AI spending against the revenue beat, and finding the cost trajectory difficult to absorb at current expectations.