Meta disappointed investors with its revenue forecast. Its stock fell 10%.

Meta’s stock fell nearly 10% in after-hours trading on July 29 after the company issued a weaker-than-expected revenue forecast for the current quarter and reported a sharp decline in free cash flow. The metric fell to its lowest level since the third quarter of 2022—a result of Meta’s transition from a social media platform developer to an AI company, Bloomberg notes. In addition, during the reporting quarter, the number of daily active users fell short of market forecasts, and earnings were below Wall Street expectations.

Meta expects revenue for the current quarter to range from $61 billion to $64 billion, or $62.5 billion at the midpoint of the range. Analysts surveyed by LSEG had forecast $63.15 billion, according to CNBC. The company also reported that the forecast “assumes that, at current exchange rates, currency effects will put downward pressure of approximately 1 percentage point on total year-over-year revenue growth.”

Meta has narrowed its capital expenditure forecast for the year to a range of $130 billion to $145 billion, down from the previous range of $125 billion to $145 billion.

In its second-quarter earnings report, Meta Platforms reported that its revenue rose 28% compared to the same period last year, totaling $60.8 billion. According to LSEG, Wall Street had forecast $60.17 billion, CNBC reports. The Facebook parent company’s advertising revenue totaled $59.36 billion.

Amid massive investments in AI infrastructure, Meta’s free cash flow fell from $8.55 billion a year earlier to $784 million. The owner of Facebook and Instagram is now actively spending money on device development—including AI-powered smart glasses—as well as on the construction of massive data centers, which are necessary for training the next generation of AI models and powering AI features in the company’s products—a factor that led to the decline, according to Bloomberg.

Earnings per share came in at $6.18, compared with the $7.22 expected by analysts surveyed by LSEG. Meta’s operating profit in the second quarter fell 8% to $18.78 billion. However, CFO Susan Lee stated during the earnings conference call that, excluding litigation costs and severance pay for laid-off employees, operating profit would have shown a 9% increase—to approximately $22.36 billion. Meta’s total expenses in the second quarter amounted to $42 billion, up 55% year-over-year due to spending on AI.

Net income for the quarter fell by 13.6% to $15.85 billion.

The number of daily active users across all Meta apps (DAP) for the quarter under review was 3.6 billion. Wall Street had expected 3.61 billion, according to data from StreetAccount cited by CNBC.

Shares of the company that owns Facebook and Instagram plummeted 9.6% to $529.5 in after-hours trading following the release of the earnings report. During regular trading on July 29, they fell 1.3% to $585.6.

Investors are closely watching how Meta is trying to monetize its AI projects, according to CNBC. Earlier this month, the company unveiled the Muse Spark 1.1 model, which Alexander Wang, head of AI, called “the most powerful model currently available for agent-based tasks and programming.” According to him, access to it is cheaper than to similar offerings from OpenAI and Anthropic. The company has been actively investing in its new AI strategy since June 2025, when it hired Wang as part of a deal that included a $14.3 billion investment in his startup, Scale AI.

“Overall, we expect that a significant portion of our computing power will be dedicated to training models, growing our core business, and developing personal agents and new products,” said Meta CEO Mark Zuckerberg during a conference call on Wednesday. “But we also plan to build a major business serving corporate clients.”

Last week, tech giant Alphabet reported that its free cash flow had turned negative for the first time in its history due to massive spending on AI. Unlike Alphabet and other hyperscalers—Amazon and Microsoft—Meta does not have a major cloud business. However, that may change, as the company is considering the possibility of leasing excess computing capacity to third-party customers.

"We receive many offers for computing power at a significant premium to the price we paid ourselves," Zuckerberg said during a conference call.

This article was AI-translated and verified by a human editor