Meta Platforms generated almost $33 billion in cash from its operations during the third quarter. It still ended the period with negative free cash flow for the first time since 2012, a consequence of the extraordinary sums Mark Zuckerberg is committing to artificial intelligence.
The Facebook and Instagram owner's October 21 earnings disclosure showed a $2.12 billion free cash flow deficit for the three months ended September, compared with a positive $10.63 billion a year earlier. Capital expenditure, including finance-lease principal payments, climbed to $34.91 billion, exceeding the $32.79 billion generated by operating activities.
The figures expose the growing financial demands of Meta's AI expansion. Building data centres, acquiring powerful processors and securing computing infrastructure require substantial upfront investment, often years before the resulting capacity can generate sufficient commercial returns.
Yet Meta's underlying business remains highly profitable. Quarterly revenue rose 26% to $64.60 billion, supported by stronger advertising demand. Ad impressions increased 10%, while the average price per advertisement climbed 14%.
Profitability came under greater pressure. Operating income declined 37% to $12.99 billion as reported expenses rose 68% to $51.61 billion. Those costs included a $9.89 billion charge associated with a settlement involving US state attorneys general over teen mental health and social media.
Excluding that legal charge, operating income would have reached approximately $22.88 billion. Meta also reported net income of $9.86 billion, demonstrating that the cash deficit was not the result of an unprofitable quarter.
The company is pressing ahead with its investment programme. Its latest guidance places full-year 2026 capital expenditure between $135 billion and $145 billion, raising the lower end of its previous forecast by $5 billion. The commitments cover infrastructure intended to support advanced AI models, advertising systems and services across Meta's platforms.
Investors have become increasingly sensitive to the financing requirements of such projects. Doubts about the enormous spending behind the AI boom have already contributed to sharp movements in semiconductor and technology shares, even as demand for computing equipment remains strong.
Meta is also changing how it can finance future growth. Alongside its earnings, the company announced a new class of non-voting shares, providing greater flexibility to issue equity without weakening Zuckerberg's voting control. The change does not establish that Meta needs an immediate capital injection.
Its financial position remains substantial. The company held $82.45 billion in cash, cash equivalents and marketable securities at the end of September, although that was lower than the $90.26 billion reported three months earlier.
For Meta's shareholders, the latest figures put a measurable cost on Zuckerberg's ambitions. Advertising continues to generate billions in profit, but the investment required to compete in advanced AI has become large enough to consume all the cash produced by the business in a single quarter. The company has yet to demonstrate how quickly that spending will translate into comparable returns.
