Meta shares slide over AI spending plans

Meta shares fell as much as 11% in extended trading after investors reacted to higher AI spending plans and weaker profits. Revenue for the April to June quarter grew 28% from a year ago to $61bn (£45.6bn), while profits fell 14% to $6bn.

Meta said it would spend $130bn to $145bn this year, mostly on AI, up from the $125bn plan it gave three months ago. Mark Zuckerberg said AI investment was “accelerating every part” of the company’s core business and outlined plans to sell AI technology to other companies, including making its Muse Spark AI model easier for firms to integrate.

Free cash flow fell to $784m, the lowest level shown in Meta’s financial records in at least five years. Forrester analyst Mike Proulx said nearly all cash generated in the quarter was consumed by AI infrastructure spending, raising questions about whether Meta’s initiatives represent diversification or distraction.

Microsoft received a more positive response from investors after reporting sales up 18% to $90bn and profits up 31% at $35.8bn. Its shares rose 5% in after-hours trading, even as the company said capital spending for the whole of the next year would be $175bn, mostly tied to AI and AI infrastructure.