Meta Platforms Inc., the parent company of Facebook and Instagram, reported a 26% rise in third-quarter revenue, beating market estimates, driven by strong advertising and AI initiatives. However, the company’s costs surged 32%, prompting a sharp 8% drop in its shares after hours, as investors reacted to CEO Mark Zuckerberg’s plans for significantly higher capital spending on artificial intelligence infrastructure.
Meta said it expects “notably larger” capital expenditures in 2026, mainly to fund new AI-focused data centers and support its long-term goal of achieving superintelligence—a level of AI capability surpassing human intelligence. The company spent nearly $70–$72 billion in capex this year, up from its earlier forecast of $66–$72 billion.
“We are investing aggressively to build capacity so we’re prepared for the most optimistic timelines,” Zuckerberg said during the earnings call. He added that if progress toward superintelligence takes longer, the extra computing capacity would still be used to accelerate Meta’s core business operations.
$16 Billion One-Time Charge Impacts Profit
Meta also recorded a $16 billion one-time charge related to U.S. President Donald Trump’s “Big Beautiful Bill,” which significantly reduced its quarterly profit. Excluding this charge, Meta’s net income would have risen to $18.64 billion, compared with the reported $2.71 billion.
AI Expansion and Hiring Drive Higher Costs
After a slow start in the AI race, Meta has reorganized its research under a new unit called “Superintelligence Labs.” The company has been on an aggressive hiring spree to attract top AI talent and has become one of the largest buyers of Nvidia’s AI chips. CFO Susan Li noted that employee compensation—particularly for AI specialists—will be a major contributor to higher costs in 2026.
Meta’s growing investments mirror those of Alphabet, Microsoft, Amazon, and OpenAI, all of which are expanding AI data center capacity. The rapid increase in infrastructure spending has fueled speculation about a potential AI investment bubble, as tech giants race to secure computing power to support their next-generation products.
Strong User Base and Ad Revenue
Despite rising costs, Meta continues to benefit from its massive global user base, with over 3.5 billion people using at least one of its apps daily. The company’s AI-driven ad platform has enhanced ad targeting and automation, while its Reels feature continues to challenge TikTok and YouTube Shorts in the short-video space.
Meta has also started monetizing WhatsApp and Threads through new ad formats, strengthening its digital ad ecosystem amid intensifying competition from rivals like Elon Musk’s X.
Outlook
For the upcoming quarter, Meta expects revenue between $56 billion and $59 billion, compared with analysts’ estimates of $57.25 billion, according to LSEG data.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Readers should conduct their own analysis or consult a qualified financial advisor before making investment decisions.
