Meta raises 2026 spending forecast as AI buildout cuts cash flow

In short: Meta is spending more on AI computers and data centers, and that spending is sharply reducing the company’s free cash flow.

What's going on

Meta reported that free cash flow, which is the cash left after paying ongoing bills and big investments, fell to $784 million in its latest quarter. That is down from $8.55 billion in the same quarter a year earlier. This happened even as Meta’s revenue, the money it brings in from sales like advertising, rose 28% to $60.8 billion.

A big reason is Meta’s push to build more AI computing infrastructure. That includes data centers, which are large buildings filled with computers that store and process data (like giant warehouses for internet work). These facilities are needed to train and run AI systems, which often require enormous amounts of computing power.

Meta also raised the low end of its 2026 capital spending forecast. It now expects to spend between $130 billion and $145 billion in 2026, up from its earlier outlook, with much of that money aimed at AI infrastructure and data centers. Meta says it plans to keep investing aggressively.

What to watch

Investors are increasingly focused on timing. The key question is when Meta’s AI spending will turn into enough new revenue and profit to justify the cost. In simple terms, Meta is buying and building a lot of expensive equipment now, and the market wants clearer signs of how soon that equipment will pay for itself.

Source: NYTimes