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Meta's AI spending drops 91% in 3 months
Meta's results showed that heavy spending on artificial intelligence technologies led to a 91% decline in free cash flow, which fell to $784 million in the second quarter. This decrease was due to investments in chips, servers, and energy. Although the company attempted to enhance its computing capabilities to generate additional revenue by leasing them to other companies, the market was not convinced, resulting in Meta's stock dropping by about 9%. Meta is facing a dilemma: whether to continue investing in AI to support future expansion or to focus on short-term profits. Currently, the company's main revenue source is advertising, which funds its investments, while companies like Microsoft and Amazon generate direct income from leasing their cloud computing infrastructure. The company has increased its capital expenditure forecast for the year, maintaining a focus on the high demand for computing power, despite witnessing the costly and unprofitable metaverse experiment that has cost billions without generating significant revenue.
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