Meta shares tumbled in extended trading Wednesday after the tech giant posted earnings that missed analysts' estimates. The company blamed a one-time tax charge related to President Trump's signature "One Big Beautiful Bill." https://t.co/oc2rBRi655 ...

Core Insights - Meta's Q3 2025 revenue reached $51.24 billion, a 26% increase from $40.59 billion in Q3 2024, while net income fell to $2.71 billion, down 83% from $15.69 billion in the same period last year due to a one-time tax expense related to the "Big Beautiful Law" [1][2][5] Financial Performance - Q3 2025 operating income was $20.54 billion, up 18% from $17.35 billion in Q3 2024, with an operating margin of 40%, down from 43% year-over-year [1][2] - Total costs and expenses for Q3 2025 were $30.71 billion, a 32% increase from $23.24 billion in Q3 2024, with significant increases in research and development costs [5][6] - Meta's effective tax rate for Q3 2025 was 87%, compared to 12% in the same quarter last year, reflecting a substantial increase in tax provisions [5][6] User Engagement and Advertising - The average daily active users (DAU) across Meta's family of services reached 3.54 billion in September 2025, an 8% increase year-over-year [3] - The number of ad impressions increased by 14% year-over-year, while the average price per ad rose by 10% [3] Future Outlook - Meta expects Q4 2025 revenue to be between $56 billion and $59 billion, with a positive impact of approximately 1% from foreign exchange factors [7] - The company anticipates total expenses for 2025 to be between $116 billion and $118 billion, reflecting a year-over-year increase of 22% to 24% [7] - Capital expenditures for 2025 are projected to be between $70 billion and $72 billion, up from previous guidance [7] Strategic Initiatives - Meta plans to expand its infrastructure capabilities to meet increasing computational demands, which will lead to higher capital expenditures in 2026 [8] - The company is focusing on hiring AI talent and expanding in key technology areas to drive future growth [8] Regulatory Environment - Meta is engaged in discussions with the European Commission regarding the "Less Personalized Ads" initiative, which may negatively impact European revenues [9] - Ongoing legal challenges related to youth users in the U.S. are expected to be heard in 2026, potentially leading to significant financial implications [9] Executive Commentary - CEO Mark Zuckerberg highlighted strong business performance and community engagement, expressing optimism about future opportunities, particularly in AI and smart glasses [10]

Market Overview - Major stock indexes showed mixed performance, with the Dow Jones Industrial Average decreasing by nearly 0.2% to 47,632, the S&P 500 remaining steady at 6,890.59, and the Nasdaq increasing by 0.55% to 23,958.47 [1] Federal Reserve Actions - The Federal Reserve reduced its benchmark interest rate by 25 basis points to a range of 3.75%-4.00% and announced the cessation of its securities holdings runoff starting December 1, marking the end of its quantitative tightening program. This decision was made amid slowing job growth, moderate economic expansion, and persistent inflation pressures, with two dissenting votes [2] Meta Platforms Inc. - Meta's stock saw a slight increase of 0.03%, closing at $751.67, but dropped over 7% in after-hours trading to $696.30. The stock's intraday high was $759.16 and low was $742.51, with a 52-week range of $796.25 to $479.80 [3][4] - The company reported third-quarter revenue of $51.24 billion, a 26% year-over-year increase, and adjusted earnings per share of $7.25. A one-time, non-cash income tax charge of $15.93 billion was included in the earnings report. CEO Mark Zuckerberg emphasized strong performance in AI and wearable technology, with significant investments planned [4] Alphabet Inc. - Alphabet Class C shares increased by 2.51% to close at $275.17, with after-hours trading rising 6.73% to $293.69. Class A shares gained 2.65% to $274.57, also rising 6.72% in after-hours trading to $293.01 [5] - The company reported third-quarter revenue of $102.35 billion, a 16% year-over-year increase, with earnings of $2.87 per share. Growth was driven by Search, YouTube, and Cloud services, while CEO Sundar Pichai noted rapid AI adoption and 650 million users for Gemini. However, the company anticipates higher capital spending in 2025 [6] Chipotle Mexican Grill Inc. - Chipotle's stock decreased by 1.24% to close at $39.76, falling 16.5% in after-hours trading to $33.19. The stock's intraday high was $40.65 and low was $39.59, with a 52-week range of $66.74 to $38.30 [7][8] - The company reported third-quarter earnings of $0.29 per share, matching estimates, but revenue of $3 billion slightly missed expectations of $3.02 billion. Comparable restaurant sales and margins saw a modest decline, and the company opened 84 new locations [8] Microsoft Corporation - Microsoft's stock experienced a slight decrease of 0.10%, closing at $541.55, and fell nearly 4% in after-hours trading to $519.99. The stock's intraday high was $546.27 and low was $536.73, with a 52-week range of $555.45 to $344.79 [9][10] - The company reported first-quarter revenue of $77.7 billion, an 18% year-over-year increase, with earnings of $4.13 per share, surpassing the Street's estimate of $3.67. Growth was attributed to strong cloud and AI performance, including a 40% increase in Azure revenue [10] Starbucks Corporation - Starbucks' stock decreased by 1.47%, closing at $84.17, with after-hours trading showing a 1.8% increase. The stock's intraday high was $84.89 and low was $83.28, with a 52-week range of $117.46 to $75.50 [11] - The company reported fourth-quarter revenue of $9.57 billion, exceeding estimates, while adjusted earnings of $0.52 per share fell short of the $0.56 estimates. Global comparable store sales rose by 1%, with international growth offsetting flat North American sales [11]

Core Insights - Meta's third-quarter earnings report led to a nearly 9% drop in share price despite beating revenue expectations with $51.24 billion, primarily due to a $15.9 billion tax charge and concerns over AI investments [1][2]. Group 1: Capital Expenditure and AI Investments - Meta plans to spend between $70 billion and $72 billion on infrastructure in 2023, with expectations of significantly larger expenditure growth in 2026 as AI workloads increase [3][4]. - The company is focusing on building novel capabilities and plans to invest aggressively in data centers and third-party cloud capacity, which will exert upward pressure on capital expenditures [4][5]. - Employee compensation is projected to be the second-largest contributor to expense growth in 2026, reflecting the hiring of AI specialists and new technical recruits [5][9]. Group 2: Reality Labs Performance - Meta's Reality Labs reported $470 million in revenue but incurred an operating loss of $4.43 billion, slightly improved from a $4.53 billion loss in the previous quarter [9][10]. - Revenue for Reality Labs received a temporary boost from retailers stocking Quest headsets ahead of the holiday season, but challenges remain due to the lack of new model releases [10][11]. Group 3: Tax Charge Implications - The company faced a one-time $15.9 billion tax charge due to changes in tax legislation, which allowed for a valuation allowance against federal deferred tax assets [11][12]. - Without this charge, Meta's effective tax rate would have dropped from 87% to 14%, positioning the company favorably for future cash tax payments [12][13]. Group 4: AI Impact on Engagement - AI-powered recommendation systems have increased user engagement, with time spent on Facebook rising by 5%, Threads by 10%, and video viewing on Instagram by over 30% [14][15]. - Meta's generative AI features for advertisers are expected to enhance performance and potentially offset losses from Reality Labs [15][16]. Group 5: AI Glasses Market Potential - Meta's AI-powered glasses are anticipated to become a profitable investment, with strong sales reported and collaborations with Ray-Ban and Oakley progressing well [17][18]. - The new Ray-Ban Displays sold out quickly, indicating strong consumer interest, and the AI capabilities are expected to be a primary usage driver for the glasses [18].

Core Insights - Major tech companies are significantly increasing their capital expenditures to support AI infrastructure, indicating a strong commitment to the future of AI [1][4] - Despite varied stock market reactions, the common theme across earnings reports is the surge in capital expenditures, reflecting intense competition in AI and cloud computing [1][4] Group 1: Google and Meta - Alphabet has raised its 2025 capital expenditure guidance to between $91 billion and $93 billion, up from a previous estimate of $85 billion, with a significant increase expected in 2026 [2] - Meta has also increased its 2025 capital expenditure guidance from $66 billion-$72 billion to $70 billion-$72 billion, with a notable increase in 2026 spending anticipated [2] - Both companies are responding to strong demand in their cloud businesses, with Google's backlog growing by 46% to $155 billion [2] Group 2: Microsoft - Microsoft reported a record capital expenditure of $34.9 billion for the recently ended fiscal quarter, exceeding market expectations of $30 billion [3] - The significant spending reflects Microsoft's commitment to meet accelerating demand, although it has not positively impacted its stock price [3] - Concerns have arisen regarding whether the demand for AI and cloud computing has outstripped Microsoft's supply capabilities [3] Group 3: Opportunities and Risks - The substantial investments by tech giants illustrate a growing customer demand for AI, evidenced by Google's 32% year-over-year revenue growth in its cloud segment [4] - However, there are rising concerns about the sensitivity of the market to costs, as seen in the stock reactions of Meta and Microsoft [4] - Investors are closely monitoring how long it will take for these large-scale AI investments to translate into significant profits, highlighting a balance between long-term growth and immediate cost pressures [4]

29 October 2025 | 4:42PM EDT Equity Research Meta Platforms Inc. (META): Q3 '25 Earnings First Take We expect investors to have a muted to negative initial reaction to META's Q3 '25 earnings report on the back of slightly raised 2025 opex and capex framework but, more importantly, company commentary that opex dollar growth and capex dollars YoY will be notably higher in 2026 (over 2025) than in 2025. Investor conversations in the weeks leading up to this earnings report were most fearful of a pace/cadence o ...

Core Insights - Major tech companies reported mixed quarterly earnings, raising concerns about a potential bubble in artificial intelligence investments [1] Microsoft - Microsoft spent nearly $35 billion on AI infrastructure in the last quarter, a significant increase from the previous year [1] - Despite an 18% revenue increase and a 12% rise in net income, Microsoft shares fell nearly 4% in after-hours trading due to concerns over rising costs [2] - The company holds a 27% stake in OpenAI, contributing to its market capitalization exceeding $4 trillion, although this level is now uncertain due to recent selloffs [4][5] Alphabet (Google) - Alphabet's shares rose by 6% in after-hours trading following impressive quarterly results, with total revenue reaching $102.35 billion [6] - The company remains strong in its advertising unit despite competition from AI startups, and analysts believe it is well-positioned for long-term AI leadership [7] - Alphabet's AI features are resonating with users, alleviating fears about its core search business being threatened by generative AI [8] Meta (Facebook) - Meta's shares dropped by as much as 10% in after-hours trading, with expectations of significantly higher capital expenses next year due to increased AI investments [12] - The company reported a net income of $2.7 billion but faced a $16 billion loss attributed to external factors [13] - Meta aims to achieve superintelligence in AI, reflecting its commitment to catching up in the AI space while still benefiting from its large user base [13]

Meta第三季度财报显示，第三季度净利润从去年同期的156.9亿美元骤降至27.1亿美元，跌幅达83%，主 要原因是美国税改法案带来的159.3亿美元一次性非现金税收支出。 扣除一次性税费影响后，每股收益为7.25美元，净利润为186.4亿美元，营收512.4亿美元，同比增长 26%，实际表现超预期。日活跃用户达35.4亿，同比增长8%；广告展示量增长14%，广告单价上涨 10%，核心广告业务依然强劲。 预计2026年资本支出将显著超过2025年的700亿-720亿美元，可能达到800亿-850亿美元甚至更高；2026 年总费用增速也将明显快于2025年的22%-24%。资本支出大幅增加主要用于基础设施建设，包括自建和 云服务采购，以满足超预期的AI算力需求。 ...

Core Points - The Federal Reserve announced a 25 basis point cut in the federal funds rate, bringing the target range to 3.75%-4.00% [2][5] - Fed Chairman Jerome Powell indicated that the market's expectation for another rate cut in December is "far from a done deal," adding uncertainty to future policy [5][7] - The decision to cut rates was influenced by a moderate expansion in economic activity, a slight increase in unemployment, and rising inflation [5][6] Economic Indicators - Economic activity is expanding at a moderate pace, with employment growth slowing and a slight rise in the unemployment rate [5] - The Congressional Budget Office (CBO) estimated that the recent government shutdown has reduced GDP by at least $7 billion [5] - Inflation remains elevated, with Powell noting that inflation expectations have risen recently [6][11] Market Reactions - Following the Fed's announcement, U.S. stock indices experienced volatility, with the Nasdaq reaching a new high, while the Dow Jones fell by 0.16% [1][13] - Nvidia's stock rose approximately 3%, pushing its market capitalization above $500 billion, while Apple also saw a slight increase, surpassing a $4 trillion market cap [3][13] Future Outlook - Powell emphasized the need to consider uncertainties regarding future rate actions, particularly for the December meeting [7][8] - The Fed has cut rates a total of 150 basis points, and while rates are not yet in a loose range, they are more accommodative than before [7][8] - Market expectations for a December rate cut have decreased from 93% to nearly 70% following Powell's comments [12]

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