Meta Free Cash Flow Turns Negative and Shakes Nasdaq

Meta free cash flow went negative for the first time in the company's history, and Wall Street flinched hard. Meta slid about seven percent on Thursday after its latest quarterly report, dragging the whole AI trade down with it.

Here is the twist: the numbers were not bad. According to Zacks Investment Research, revenue rose twenty-six percent from a year earlier to sixty-four point six billion dollars, beating forecasts, and adjusted earnings per share landed at seven dollars and forty cents against an expected six fifty-two. Advertising revenue climbed twenty-eight percent as AI kept sharpening its ad tools.

The Cash Hole Behind the Beat

The problem sits further down the report. Meta burned through two point one two billion dollars of free cash flow in the quarter, compared with a positive ten point six three billion a year earlier, Zacks reported. Free cash flow is the money left after a company pays for its operations and its big purchases, so a negative number means more went out than came in.

The reason is spending on AI. Meta put roughly thirty-five billion dollars into AI capital expenditure in the quarter alone. It also raised the bottom of its full-year range, which now runs from one hundred thirty-five billion to one hundred forty-five billion dollars, up from a floor of one hundred thirty billion, according to CNBC.

Meta also plans to issue nonvoting shares to fund its AI push without diluting CEO Mark Zuckerberg's control, per Zacks. That detail landed badly with investors already nervous about how the bills get paid.

The Whole Tech Sector Felt It

The damage did not stop at one company. The Nasdaq Composite dropped two point six percent, or about six hundred ninety-four points, to close near twenty-six thousand. That was its worst day since early June, according to Zacks. The S&P 500 fell one point two percent, its biggest decline since July.

Chip names took the heat too. Nvidia lost around four percent, Micron about six and AMD about eight, based on the Zacks tally. The market's fear gauge, the VIX, jumped more than fourteen percent to just above nineteen.

Nvidia boss Jensen Huang pushed back on the gloom in a CNBC interview. He said he sees no sign of a memory glut by twenty twenty-nine, adding that you can always use more memory, CNBC reported.

Oil and Bonds Pile On

AI worries were not the only thing rattling traders. Brent crude jumped four percent to settle at one hundred thirteen dollars and seventeen cents, a level not seen since early May, after a report that the United States and Israel drew up plans for renewed strikes on Iran following the midterm elections, CNBC said. Zacks tied part of the move to new Houthi attacks on Saudi oil infrastructure.

Money fleeing stocks seemed to land in bonds. The ten-year Treasury yield slid more than seventeen basis points to just under five percent, its sharpest one-day drop since March twenty twenty-three.

Think of it like a friend who just got a huge raise but keeps spending even faster than the paycheck arrives. The income looks great on paper, yet the bank balance keeps shrinking. That is the picture traders saw when they read the Meta free cash flow line, and it explains why a blowout quarter still ended in a double-digit-style gut punch for the share price.

Analysts have warned for months that the AI build-out depends on constant outside funding from debt, new shares or the cash piles of a few giants. Thursday made that worry feel real, and it will likely shape how investors read every big tech report still to come this season.

Why This Matters If You Are Not a Trader

If you have a retirement account, a school fund or a few shares on an app, AI giants make up a huge share of the big indexes. When they wobble, your balance wobbles too. The sell-off also spilled into crypto, with bitcoin hovering around eighty-one thousand dollars on Friday.

The bigger question is whether the AI boom can pay for itself. Companies are spending at record speed on data centers and chips, and Thursday showed investors are starting to ask when the cash comes back. Follow the latest on our tech coverage as this story develops.

For now, the takeaway is simple. Strong sales no longer shield a stock if the spending behind them looks endless, and Meta free cash flow turning negative may be the moment that message got loud.