Shares of Meta Platforms plunged roughly 9% after the company delivered a Q2 that split neatly in two: revenue of $60.8 billion came in 28% above a year ago and ahead of analyst consensus , but adjusted earnings of $6.18 per share missed estimates of roughly $7.13 . The gap between a booming top line and shrinking bottom line is now the central question hanging over the stock.
AI Spending Is Swallowing Nearly Every Dollar Meta Earns
Meta's operating cash flow rose nearly 25% to $31.86 billion — then capital expenditures, including lease payments, consumed $31.08 billion, or 97.5% of that cash.
Free cash flow collapsed from $8.55 billion a year ago to just $784 million, shrinking the free-cash-flow margin from 18% to 1.3%. This matters because free cash flow — money left after running and building the business — is what funds buybacks, dividends, and debt paydown. Second-half spending must accelerate roughly 27% above Q2's pace just to hit the low end of the new $130–$145 billion full-year capex range , meaning the cash squeeze will likely worsen.
Costs Are Growing Almost Twice as Fast as Revenue
Total costs and expenses surged 55% to $42 billion, including $2.4 billion in legal charges and $1.18 billion in severance , compressing operating margin from 43% to 31% . Even stripping out one-time items, rising depreciation on new data centers is a persistent margin headwind that will only grow as more facilities come online.
The Ad Engine Is Still Humming — But It's Carrying the Whole Load
Advertising accounted for $59.36 billion of the $60.8 billion total — roughly 97.6% of revenue.
Ad impressions rose 14% and average price per ad climbed 12%. The core business is healthy, yet JPMorgan noted that monetizing AI beyond ads "appears limited," adding there was little new clarity on developer fees, AI agents, or compute sales.
Wall Street Cut Targets but Didn't Walk Away
The average analyst price target fell from $822 to roughly $802, with consensus still rating the stock a "Buy" across 71 analysts.
JPMorgan slashed its target to $640 and now projects 2027 capex of $243 billion, up 70% year-over-year — a figure that underscores how long it may take before investors see real returns on Meta's AI infrastructure buildout.