Meta Shares Tumble 11% as Heavy AI Investment Plans Spook Investors

Meta shares plunged 11% after the company reported second-quarter earnings that showed sliding profits and reiterated its commitment to heavy artificial intelligence spending.

Revenue for the April-to-June period rose 28% year-over-year to $61 billion, but profit dropped 14% to $6 billion. The results, reported by the BBC, sent the stock of the Facebook and Instagram parent tumbling.

Meta now expects to spend between $130 billion and $145 billion this year, primarily on AI projects. That represents a sharp increase from the $125 billion it outlined just three months earlier.

Chief executive Mark Zuckerberg defended the outlay on an earnings call, saying AI spending was “accelerating every part of our core business.” He added that the company planned to begin selling AI technology to other enterprises, calling it “a very, very large opportunity.”

Chief financial officer Susan Li told analysts that commercializing Meta’s AI tools would help generate returns on the investment. “By 2028, we’ll have turned over a lot of cards,” she said, according to the BBC’s account of the call.

Those business lines have yet to materialize. Free cash flow for the quarter stood at $784 million, the lowest figure Meta has posted in at least five years. The squeeze echoes Google’s recent earnings report, which also showed its smallest leftover cash on record and triggered a stock sell-off.

Zuckerberg acknowledged the industry-wide gamble. “I get that this is a big bet across the industry. My personal bet is that the people who invest in this will feel very good and be rewarded over time,” he said.

He argued that Meta’s AI capabilities were already boosting engagement on Instagram and Facebook and helping smaller businesses create ads. The company is also developing AI agents—chatbots that operate with some autonomy—which Zuckerberg described as “the next wave of our product line in the months and years to come.”

“Soon, we’ll have agents that can work 24/7 on your behalf,” he added. “Great personal agents need to just work out of the box. I’m very excited about this and we will have more to share soon.”

On the plan to sell AI models and computing tools to third parties, Zuckerberg said the first step would be making its Muse Spark AI model easier to integrate. He noted that Meta aims to “build a large business for large businesses” and has more coding and product tools in the pipeline.

While acknowledging that selling to other companies would flex “a different muscle than we’ve historically had,” Zuckerberg insisted the financial upside was too significant to ignore. “It’s not just about selling compute; it’s the API services and the productivity services,” he said.