Meta Q3 Earnings: Can Meta Justify Its Massive AI Bet?

Core Insights - Meta Platforms is set to report its Q3 earnings on October 29, 2025, with expectations of strong performance driven by significant investments in AI [1][6] - The company has a solid track record of beating Wall Street expectations, having outperformed estimates for eleven consecutive quarters [7][8] Financial Performance - Year-to-date, META shares have gained approximately 26% in 2025, and nearly 200% over the past five years [2] - Zacks Consensus estimates project Q3 revenue of $49.45 billion and EPS of 6.61, reflecting a year-over-year EPS growth of 9.62% [3][5] - The average post-earnings move for META has been 5.28%, with the options market implying a potential move of +/- 7.1% following the upcoming earnings report [2] Sales and Earnings Estimates - Current quarter (Q3 2025) sales estimates range from a low of $48.98 billion to a high of $50.97 billion, with a year-over-year growth estimate of 21.83% [4] - For the current year (2025), total sales are expected to reach $196.14 billion, with a growth estimate of 19.23% [4] Capital Expenditure and AI Investments - Meta is projected to spend approximately $70 billion on capital expenditures (CAPEX) in 2025, with expectations for this to increase to $100 billion in 2026 as the company invests heavily in AI infrastructure [10][12] - The effectiveness of these AI investments is a key focus for investors, particularly regarding their impact on advertising revenue and user engagement [12][13] Key Drivers to Watch - Advertising revenue remains the most critical metric for Meta, as it constitutes the majority of the company's earnings [12] - Investors will be monitoring CAPEX spending to ensure it does not adversely affect free cash flow and margins [13] - The impact of AI on user engagement, especially through features like Instagram Reels, is another important trend to observe [13]