Meta Misses Earnings Estimates Despite Record Revenue
Meta (META) reported stronger-than-expected third-quarter revenue of $51.24 billion, surpassing analyst predictions of $49.6 billion. However, earnings per share dropped sharply to $1.05, missing estimates due to a massive one-time $16 billion tax charge associated with U.S. President Donald Trump's "Big Beautiful Bill"[1][2]. Excluding this charge, Meta’s net income would have risen from $2.71 billion to between $15.93 billion and $18.64 billion[1].
Stock Drops as Tax Hit Overshadows Growth
Following the announcement, Meta’s stock fell more than 6% in after-hours trading, reflecting market concern over the significant impact of the tax charge and accelerating spending on artificial intelligence infrastructure[1][2].
Record AI Investments Fuel Meta’s Future Plans
Meta has dramatically increased its capital expenditure forecast to $70–$72 billion, up from initial estimates of $66–$72 billion, signaling long-term commitment to AI development[1]. Major investments include:
- A $14.3 billion deal with Scale AI, with its CEO joining Meta as Chief AI Officer[1]
- At least $1.5 billion in a new El Paso, Texas data center[1]
- A $27 billion financing agreement with Blue Owl Capital for building the Hyperion data center in Louisiana[1]
- Ongoing recruitment of AI engineers and researchers from rival companies like OpenAI and Apple[1]
CFO Susan Li noted Meta’s capital expenditures are expected to grow substantially in 2026, primarily driven by infrastructure costs, cloud expenses, and higher employee compensation due to increased hiring of technical talent in AI[1].
Balancing High-Tech Expansion and Workforce Adjustments
While investing heavily in AI, Meta has also streamlined its workforce, laying off nearly 600 employees from its AI division recently, mirroring broader Silicon Valley trends as tech giants seek efficiency amid aggressive investment in artificial intelligence[1].
Digital Advertising Remains Strong Despite Competition
Revenue from Meta’s app family—which includes Facebook, Instagram, Threads, and WhatsApp—climbed to $50.77 billion, outpacing estimates and underlining continued dominance in the digital ad market, despite ongoing rivalry from platforms like TikTok and YouTube Shorts[1].
Looking Ahead: Meta Bets Big on AI
Industry analysts project total AI-related spending among major tech players will exceed $400 billion in 2025. Meta’s ability to convert these historic investments into sustainable profitability will be critical for future investor confidence and long-term growth[1].
