Meta CEO Mark Zuckerberg Commits to Aggressive AI Compute Investments Despite Declining Free Cash Flow
Shares of Meta Platforms (META) have fallen about 16% year-to-date as investors weigh the near-term financial impact of its aggressive capital spending on artificial intelligence infrastructure. During a recent earnings call, CEO Mark Zuckerberg emphasized that despite an 18% decline in trailing-12-month free cash flow, the company remains committed to expanding AI compute capabilities. Meta's core ad business is performing well, with second-quarter revenue from apps rising 27% year-over-year and global average price per ad increasing by 12%. User engagement metrics also improved across platforms like Instagram and Facebook. The company reported a 60% increase in daily interactions for its AI assistant after integrating the Muse Spark model. Meta is investing heavily through initiatives such as the Meta Compute project, including plans to build a new 1-gigawatt data center with BlackRock. Capital expenditures reached $30 billion in Q2 and are expected to hit between $130 billion and $145 billion for the full year. CFO Susan Li noted that historical under-building of AI infrastructure has made existing capacity valuable, suggesting long-term benefits from current investments.
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