Meta’s Q3 profit plunges on $16 billion one-time tax charge related to Trump's Big Beautiful Bill

Core Insights - Meta Platforms Inc. recorded a nearly $16 billion one-time charge in Q3, significantly impacting its earnings, with reported net income at $2.71 billion instead of an adjusted $18.64 billion without the charge [1] - Following the announcement, Meta's shares fell approximately 6% in after-hours trading [1] Capital Expenditure - Meta raised its full-year capital expenditure forecast to $70–72 billion from a previous range of $66–72 billion, with expectations for notably larger spending in 2026 [2] - The company plans to invest aggressively in infrastructure to meet expanding compute needs, both through building its own facilities and contracting with third-party cloud providers [2] Rising Costs - Employee compensation costs, particularly for AI hires, are expected to be the second-largest contributor to rising expenses [3] - Despite recent job cuts of around 600 in the AI division to streamline operations, Meta's investments in AI infrastructure are increasing, leading to short-term cost pressures [5][6] AI Initiatives - Meta is focused on artificial intelligence, aiming for superintelligence, and has reorganized its AI initiatives under a new unit called Superintelligence Labs [4] - The company has committed to spending hundreds of billions to develop advanced AI infrastructure, including a recent $27 billion financing deal for a data center project in Louisiana [5] Advertising Strategy - Meta leverages its 3.2 billion daily active users to enhance ad revenue through an AI-optimized ad platform that automates campaign delivery and improves ad quality [7] - The company has expanded its advertising reach to platforms like WhatsApp and Threads, competing with other social media giants [7] Industry Trends - Meta's significant investment in AI reflects a broader trend in the tech industry, with major firms expected to spend $400 billion on AI infrastructure by 2025 [8] - However, the aggressive spending amid economic uncertainty raises concerns about a potential AI bubble and scrutiny over executive decisions [9]