Meta has offered Wall Street a blunt look at the mounting cost of competing in artificial intelligence, and investors did not like what they saw. The Facebook parent missed earnings expectations and delivered revenue guidance that came in below forecasts, pushing Meta shares down as much as 11% in after-hours trading, CNBC reported. The biggest jolt came from free cash flow, which plunged to $784 million in the quarter from $8.55 billion a year earlier as the company sharply increased spending on AI infrastructure.
The financial strain may grow even heavier in 2027. Analysts estimate Meta could burn through more than $20 billion in cash that year, based on projected spending of $174 billion. Deutsche Bank sees the total potentially climbing to $215 billion, while Raymond James has modeled an even higher figure of up to $280 billion.
Unlike other tech giants making massive AI investments, such as Amazon and Alphabet, Meta has fewer obvious cushions. It does not have a cloud computing business to offset costs, nor has it established a strong history of building major revenue streams outside digital advertising. Meta’s long-term debt has climbed to $83.7 billion, and Chief Financial Officer Susan Li said the company does not plan to reassess the pace of spending until “’28 and beyond.” Analysts say investors may not be willing to give it that much time.
Meta’s latest results underscored just how costly the artificial intelligence race has become, and the market response was swift. After the company fell short of earnings estimates and issued softer-than-expected revenue guidance, its stock dropped as much as 11% in extended trading, according to CNBC. The clearest warning sign was free cash flow, which sank to $784 million from $8.55 billion in the same quarter last year as Meta accelerated its AI spending plans.
Looking ahead, analysts are bracing for an even deeper cash drain in 2027. Current projections call for Meta to spend about $174 billion, a level that could translate into more than $20 billion in cash burn. Deutsche Bank estimates spending could reach $215 billion, while Raymond James has suggested the number could rise as high as $280 billion.
That scale of investment is especially risky because Meta lacks the kind of diversified business model enjoyed by Amazon and Alphabet. Without a cloud division or a proven record of creating large new businesses beyond advertising, the company has less room for error. Its long-term debt now stands at $83.7 billion, and CFO Susan Li has indicated Meta will not revisit its spending pace until “’28 and beyond.” For many investors, analysts warn, that timeline may be far too long.
