The AI trade is coming to a realization: America’s best businesses are turning into utilities.

Such is the fate that befalls Meta, whose shares fell as much as 10% in after-hours trading Wednesday after the company missed earnings owing to costs ballooning 55% (Meta’s stock later recovered some ground and was down 7%). Its operating income fell 8%, net income dropped 14%, and it barely eked out $784 million of free cash flow—just narrowly missing falling into negative territory and well below the roughly $12 billion in free cash flow the company has averaged over the previous eight quarters.

Meta’s revenue in Q2 was up 28% from a year earlier, beating expectations, but operating income for Family of Apps, the segment containing Facebook, Instagram, WhatsApp and Messenger, fell to $23.4 billion from $25.0 billion.

So its core business grew revenue but made less money doing it.

And the money that the company is earning is immediately being used—with most of it not going to investors. The reason why is the term investors have come to love to hate: capex. Capital expenditure is now up to $31.1 billion in the quarter, nearly double the amount spent a year earlier. Operating cash flow came to $31.9 billion; in other words, the company spent almost every dollar its businesses could generate on AI infrastructure: servers, data centers, network infrastructure, and chips.

Meta has always had to invest in the data centers that serve its popular social networking services for people all over the world. But the massive amount of computing power necessary to train and run AI models has supercharged the level of investment, upending the financial model in which Meta’s lucrative advertising business allowed it to stockpile cash. This new Meta, like its hyperscaler peers, must build multibillion-dollar data centers at a nonstop pace, acquiring land, securing power, purchasing chips, running cooling systems, and replacing machines that become obsolete within years (Depreciation and amortization in the second quarter rose 46% year over year to $6.4 billion).

Its rivals, Microsoft, Amazon, and Google, have created an escape hatch for themselves, renting that infrastructure to outside customers through enormous cloud businesses. That allows them to generate immediate revenue from their cloud investments. Indeed, Microsoft was enjoying its stock rising almost 2% from that cloud growth after Wednesday’s close of market as Meta CEO Mark Zuckerberg fielded questions from analysts wondering why his company wouldn’t do the same.

Zuckerberg acknowledged the potential to generate additional revenue by renting its computing infrastructure to other companies, and confirmed that Meta has plans to get into the cloud business, promising an update soon. “We’re getting a lot of offers for compute at a significant premium for what we paid for it,” Zuckerberg said.

But he framed the opportunity as more of a side quest than a core business, and said that he believed the real value is in offering its own AI services on top of its infrastructure. “It would be foolish to basically just sell all of the compute and take a short-term profit,” Zuckerberg said. He added the company expects “a significantly higher margin on selling intelligence rather than selling compute directly.”

The intelligence Zuckerberg referred to is a full stack of businesses Meta hopes to build: an ad system that AI has made 15.7% better at converting; agents that could answer customer messages for a million businesses; an API selling access to Meta’s models; and, most mysteriously, a personal assistant working 24/7 to build a profile of a user’s health, finances, and relationships, which does not exist yet. “There’s only so much that I can say on an earnings call about this,” Zuckerberg said.

In the meantime, the company has transitioned its financing. Meta issued $24.9 billion of long-term debt during the quarter and bought back no stock, after repurchasing more than $10 billion a year earlier. CFO Susan Li said Meta had been deliberately moving toward “a greater mix of debt” to fund infrastructure projects with long lives and expected passive income.

Meta now expects full-year capital expenditures of $130 billion to $145 billion, having raised the floor. It spent $50.9 billion in the first half. That leaves $39 billion to $47 billion a quarter for the rest of the year, against operating cash flow of roughly $32 billion. So it follows that this quarter was the last positive cash-flow quarter this year.

When asked what 2027 would cost, Li declined to say, offering instead that Meta expects to remain demand constrained; that it has more profitable uses for computing power than computing power to use. Zuckerberg, not one to balk before investors, did not choose to hedge this time either.

“My personal bet is that the people who invest in this are going to be rewarded and feel very good over time,” he said.