META GREW 28%. ITS FREE CASH FLOW FELL BELOW $1 BILLION. Meta’s quarter exposed the split at the center of its investment case: the existing business is booming while the future business is absorbing nearly all the cash. Revenue reached a record $60.8 billion, up 28% year over year. Free cash flow fell from more than $12 billion in Q1 to just $784 million, equivalent to roughly 1.3% of quarterly revenue. That is the number behind the 10% after-hours selloff. The growth was real Meta’s advertising machine clearly remains powerful, and the company is not suffering from a demand problem. But net income still fell 14% to $15.8 billion, while $2.4 billion of legal costs contributed to a 13% decline in earnings per share. Strong top-line growth therefore produced much weaker cash economics than investors have come to expect from Meta. The cash demands keep rising Meta raised the bottom of its annual capital-spending forecast from $125 billion to $130 billion, leaving the upper end at $145 billion. Management says companies have offered to buy Meta’s excess computing capacity at premium prices, providing a potential source of immediate revenue. Zuckerberg is choosing to preserve that capacity for Meta’s own products instead. That is an important distinction: near-term monetization appears available, but management believes the compute will create more value internally through advertising, subscriptions, business agents or a future cloud offering. The problem is that none of those newer businesses yet provides investors with a measurable bridge from today’s spending to tomorrow’s cash flow. Why the stock reaction was so severe Meta guided current-quarter revenue to $61–64 billion, putting the midpoint slightly below the roughly $63 billion analysts expected. That is a modest forecast miss for a company still growing rapidly. It became a major stock miss because investors are no longer judging Meta solely by revenue growth—they are judging how much capital must be reinvested to sustain it. Bottom line: Meta has not lost its growth engine, but it has lost visibility into shareholder cash conversion—and record revenue becomes less valuable when nearly all the cash is claimed before it reaches investors.