Meta lifts capital spending to $130 billion

Meta raised its 2025 capital-expenditure outlook from $125 billion to at least $130 billion during its second-quarter investor briefing.

The announcement arrived two days before the shares completed a decline of more than 11 percent over five trading days, leaving the stock 26 percent below its all-time high recorded in August 2025.

Free cash flow dropped to $784 million in the quarter, the lowest level in five years, versus $8.55 billion in the comparable quarter a year earlier. The sharp decline occurred despite revenue increasing 28 percent, a metric that normally would bolster cash flow rather than deplete it.

Unlike Alphabet and Amazon, Meta does not operate cloud businesses that can finance infrastructure construction or sell excess compute capacity to external customers. The business model relies almost exclusively on advertising, and without a proven second revenue stream, every billion allocated to data centers comes directly from the core operating profit.

Internal reports describe Zuckerberg’s “superhuman intelligence” lab as “a closed camp that crushes the soul”, citing low morale and a lack of significant outputs.

The internal language model Muse Spark was released in a developer preview on 11 July and attracted almost no community attention, while the image model Muse Image is viewed as a late effort to close a gap with rivals that have already launched second- and third-generation models.

Zuckerberg said in the briefing that AI spending “has accelerated every component of the core business”, from user-experience improvements to advertiser performance, and promised that part of the technology would be sold to other businesses. In practice, the company did not disclose an annual revenue target for the B2B segment, and the AI agents he referenced, which work “24/7 for you”, remained a presentation only.

Investors are responding to a broader industry concern that the pace of data-center construction has outstripped the ability to demonstrate a clear return on investment. Meta is most exposed to this risk because it lacks infrastructure businesses to sell, and Zuckerberg’s history of the failed metaverse bet makes the market reluctant to place blind trust in the current gamble.

Analysts assess that the next year may be worse, with possible impairments on equipment and infrastructure beginning to affect the statements. Meanwhile, the company is burning cash at a rate that is not sustainable without a structural change to the revenue model.

Zuckerberg refused in the briefing to provide an expected date for the AI division to achieve operating profitability.