Business and economy·October 23, 2026, 06:55

AI spending eats into Meta's cash: First negative free cash flow since 2012

AI-generated from the sources listed, with automated source checks.

Meta spent more on investments than it earned from operations in the third quarter, pushing free cash flow negative. Meanwhile, Meta is introducing a new share class that management plans to use, among other things, to raise capital.

Meta is spending so much on AI that the company ended the third quarter of 2026 with negative free cash flow of $2.12 billion. Free cash flow is the money left over after operations have paid for investments. According to Crypto Briefing, it is the first negative quarter since the first half of 2012.

By comparison, free cash flow was positive at about $10.6 billion in the same quarter a year earlier, XTB reports.

Investments larger than operating profit

Meta's investments in data centers, equipment and more (capex) came to $34.9 billion in the quarter. That is more than the $32.8 billion generated by operations. Investments rose about 80% in a year and are going mainly to AI infrastructure.

The business itself continued to perform well. Revenue rose 26% to $64.6 billion, above analysts' expectations of $63.3 billion. Earnings per share were $3.83, versus an expected $3.57.

Operating income fell 37% to $13 billion, however. That was due to a $9.89 billion settlement with state attorneys general over youth mental health and social media.

For 2026, Meta expects capital expenditures of $135-145 billion and has raised its forecast for total expenses to $175-179 billion. Revenue in the fourth quarter is expected to come in at $73-76 billion.

New share class without voting rights

Meta also plans to introduce a new, publicly listed share class, Class C, without voting rights. The plan is for each shareholder to receive one Class C share in January 2027 for each Class A or Class B share, as a stock dividend. Economically, that is equivalent to a 2-for-1 stock split, in which shareholders get twice as many shares.

Management cites raising capital, employee compensation and acquisitions as purposes for the new share class. Computerworld writes that Meta will issue the new shares to raise capital for its AI buildout. The sources do not indicate that Meta has decided on a specific issuance or amount.

XTB assesses that the bill for the next phase of the AI race is so high that even one of the world's most profitable companies is preparing an additional source of capital.

Mixed picture in the stock market

The sources paint a mixed picture of the stock's performance. According to XTB, the stock rose about 2-3.5% in after-hours trading immediately following the earnings report, to about $720. According to Computerworld, it fell 7% on Thursday, while the Nasdaq Composite fell 2.6% and Nvidia fell 4%. Computerworld points out that investors are concerned about when the AI investments will pay off.

The figures come from the outlets Crypto Briefing, XTB and Computerworld, and not directly from Meta's own earnings release.