Meta posts $60.8B Q2 revenue as free cash flow collapses 91% amid record AI capex

Meta reported second-quarter 2026 revenue of $60.8 billion, up 28% year over year, but free cash flow collapsed 91% to just $784 million as quarterly capital expenditure hit a record $31 billion — the clearest sign yet of how heavily AI infrastructure spending is weighing on even the most profitable tech balance sheets. Mark Zuckerberg committed to up to $145 billion in annual AI capex going forward.

Alongside earnings, Meta launched Muse Spark 1.1, a commercial frontier model priced at roughly a quarter of OpenAI and Anthropic offerings — an aggressive value play. But developers pushed back on r/MachineLearning, noting Muse Spark 1.1 is US-only, waitlisted, and blocked from third-party aggregators, calling it 'not yet' a real cheap alternative despite the 75%-cheaper headline.

The results feed a broader skepticism about Meta's AI execution. A widely-shared critique argued that despite massive investment, Meta struggles with basics like content moderation — pointing to a surge of fake Joe Rogan ads — and that its real AI strength remains advertising optimization rather than consumer AI leadership or open-model impact. The core tension: investors are being asked to fund $145B/year in capex on faith, while free cash flow evaporates and product traction stays ambiguous. Watch whether Muse Spark opens up beyond the US waitlist and whether capex intensity forces a narrative reset next quarter.