Now Reading: Meta profits fall 14% as AI spending hits Rs 11.8 lakh crore
-
01
Meta profits fall 14% as AI spending hits Rs 11.8 lakh crore
Meta reported a 14% drop in net income to $15.8 billion for the June quarter, missing Wall Street expectations, as it spent heavily on AI infrastructure along with $2.4 billion in legal…
The Story in Brief
Meta reported a 14% drop in net income to $15.8 billion for the June quarter, missing Wall Street expectations, as it spent heavily on AI infrastructure along with $2.4 billion in legal charges and $1.2 billion in severance costs from May layoffs. Revenue rose 28% to $60.8 billion, beating estimates, driven by advertising. Shares fell 12% in after-hours trading.
CEO Mark Zuckerberg reaffirmed capital expenditure of $130-145 billion in 2026, nearly double last year's spending, to fund data centres and chips for AI. He announced plans to launch a cloud computing business renting out Meta's computing power. The Reality Labs VR unit posted an operating loss of $4.6 billion. Free cash flow plunged to $784 million from $8.5 billion a year earlier.
The Indian Opinion
The narrative that Meta's AI splurge is a visionary bet ignores the human cost, 8,000 employees were shown the door in May while Zuckerberg commits Rs 11.8 lakh crore to data centres. The 'AI creates jobs' claim rings hollow when the jobs it creates are in cloud rental, not for those laid off. The real test will be whether Meta's cloud business can generate enough revenue to stop the cash burn before free cash flow turns negative.
Sources (2): thehindu.com, timesofindia.indiatimes.com
This story was synthesised by AI from the 2 sources linked above.
Updated: this story now draws on 2 sources.
