META Drops 9% as Free Cash Flow Collapses 91%, AI Agent Pitch Falls Flat

Mark Zuckerberg spent Wednesday’s earnings call describing AI agents that would handle users’ health, finances and careers, alongside coding and customer service agents he wants to sell to businesses.

Investors spent Thursday selling.

Meta Platforms Inc. (NASDAQ: META ) fell about 9% as the market worked through a quarter in which the company’s cash generation almost entirely disappeared.

Meta produced $31.86 billion in operating cash flow over the three months, then spent $31.08 billion of it on capital expenditure, leaving free cash flow of $784 million.

That is down 91% from a year earlier.

Guidance did not help.

Meta pointed third-quarter revenue to between $61 billion and $64 billion, and the $62.5 billion midpoint landed below Wall Street’s roughly $63.1 billion expectation.

Nobody Can Find The AI Revenue The advertising machine underneath all of this still works, with revenue of $60.8 billion beating estimates and ad demand holding firm.

What Meta has not disclosed is how much incremental revenue its newer generative-AI products produce, or what return they earn on the infrastructure built to support them.

Ed Zitron, noted AI skeptic, made that case on CNBC hours before the results landed.

Meta “will not disclose its AI revenues,” he said, arguing the superintelligence framing exists to keep the question off the table.

Zitron said Meta had spent roughly $180 billion in capital expenditure before the latest quarter.

Meta does not break out how much of that total went to AI.

JPMorgan’s Doug Anmuth said much the same after the call.

Meta “did not come away learning much incremental” on the developer API, consumer and business agents, or plans to monetize compute directly, he wrote while cutting his target to $640 from $725.

Traders Will Not Price Meta At The Frontier Polymarket traders give Meta a 2% chance of having the best AI model at the end of the year.

Anthropic sits at 70%, Google at 11% and OpenAI at 9%.

That holds even after Bank of America’s Justin Post said Meta’s next model, code-named Watermelon, “has achieved frontier-level performance on internal benchmarks.” Nobody Gets To Vote Zuckerberg controls Meta’s voting shares, leaving outside shareholders with little formal power to force a change.

Analysts expect the spending to keep growing, with Anmuth projecting 2027 capital expenditure of $243 billion, up 70% year over year.

Zitron made the same point less politely on CNBC.

Zuckerberg “can do whatever he wants,” he said. “He’s a mad king.

And so he’ll spend money in whatever way he wants.” Image: Shutterstock Read Also: 'All Bark and No Bite': Peter Schiff Says Kevin Warsh Chose Inflation