Meta Platforms reported third-quarter revenue of $64.6 billion on 21 October, up 26% from a year earlier, but also set its 2026 capital spending at $135 billion to $145 billion and booked a $9.89 billion legal charge. Net income was $9.86 billion and diluted earnings per share were $3.83, which the company said would have been $7.40 without the charge. Meta’s shares fell nearly 7% on Thursday, according to Al Jazeera, which said the company’s net profit fell short of expectations. The question is whether the business is strong enough to justify the spending.
The case for Meta rests on its operating results. According to the company’s earnings release, revenue of $64,601 million was up 26% and daily active people averaged 3.64 billion in September, up 3% from a year earlier. Excluding the legal charge, earnings per share would have been $7.40, against $1.05 a year earlier. The headcount of 66,775 at the end of September was 15% lower than a year before, which means revenue is growing while the workforce shrinks. Diluted earnings per share of $3.83 were up 265% from $1.05 a year earlier even after the charge. Chief executive Mark Zuckerberg said: “Our investments are paying off, the core business is strong, and we’re seeing velocity across the board.” The board also approved a new, non-voting Class C common stock, with a one-time dividend of one Class C share for each existing share, effective in January 2027, and Meta expects Class A shares to trade as if a two-for-one split had occurred. The record and payment dates for the dividend are still to be set, and the dividend does not change any shareholder’s voting power.
The case for caution rests on the size of the spending and the charge. Capital expenditures in the quarter were $34.91 billion, including finance leases, and the company’s 2026 capex guidance of $135 billion to $145 billion was narrowed from $130 billion to $145 billion, which still leaves the upper end unchanged. Total expenses are expected at $175 billion to $179 billion, which the company raised to include the third-quarter legal charge. The $9.89 billion legal charge cut earnings per share from $7.40 to $3.83, nearly half. Gartner forecasts global AI investment of $2.7 trillion in 2026, and Meta’s shares fell alongside other technology stocks on a day when the Nasdaq dropped 2.6%, with Amazon down 4.6% and Nvidia down 4.4%. Seaport Research Partners’ Jay Goldberg said the market move reflected sentiment more than tangible reasons, and that “there are legitimate concerns about the AI trade.”
For investors, the issue is how Meta pays for its AI plans. Spending of this size depends on revenue growth continuing at the current pace, and a slowdown would raise questions about the return. For the wider market, Meta’s guidance is a signal of how much money the biggest technology companies are prepared to commit, which affects chipmakers and data-centre builders that depend on that demand. A new share class that carries no votes also leaves control where it is, which matters to those who watch governance.
Meta’s quarter combined fast growth with a large one-off cost and a large spending plan. The market’s reaction suggests that investors are focused on the second of those.