Meta Platforms shares tumbled as much as 9.6 percent in after hours trading on Wednesday after the company posted quarterly results that beat revenue expectations but rattled investors with sharply higher spending plans tied to artificial intelligence. Shares fell from a close of $585.61 to as low as $529.15 as Wall Street digested the numbers.
The company reported adjusted earnings of $6.18 a share on revenue of $60.8 billion, missing analyst expectations of roughly $7.17 a share even as revenue came in slightly ahead of the $60.19 billion Wall Street had forecast, according to reporting on the earnings call. Revenue growth remained strong, but investors focused instead on Meta’s decision to raise its full year 2026 capital expenditure guidance to a range of $130 billion to $145 billion, up from a prior range of roughly $115 billion to $135 billion, with the bulk of that spending directed at AI infrastructure.
The spending surge has weighed heavily on Meta’s cash position. Capital expenditures reached $31.08 billion in the quarter, and operating cash flow of $31.86 billion left free cash flow of just $784 million, down from $8.55 billion a year earlier, according to the earnings breakdown. That is among the lowest free cash flow figures the company has reported in years, as nearly all of its cash generation was absorbed by data center and chip spending.
Chief executive Mark Zuckerberg defended the buildout, telling investors that AI is accelerating every part of the company’s core business, from ad targeting to content recommendation, and that Meta intends to begin selling AI technology and infrastructure services to other companies. He acknowledged the scale of the financial bet but said those who invest aggressively in AI now will be rewarded over time.
Analysts have drawn comparisons between the current AI spending wave and Meta’s earlier multibillion dollar bet on the metaverse, which drew years of investor skepticism before the company scaled back its Reality Labs investment. The core concern this time, as several analysts framed it, is that Meta is asking shareholders to fund a much larger AI buildout before the revenue case for that spending is fully proven out.
The market reaction stood in contrast to Microsoft, whose shares rose about 5 percent in after hours trading following its own quarterly results the same week, a divergence that suggested investors are willing to tolerate enormous AI spending when it is paired with clearer signs of financial payoff.
The diverging reactions to Meta and Microsoft’s results underscore how closely Wall Street is now scrutinizing the return on investment from the AI infrastructure race, even as nearly every major technology company continues to escalate its spending in the sector.
Sources: Investing.com, Tech Times, NAI500
Author: Pulse Of Nations Wire Desk
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