META’s Big Earnings Beat Overshadowed by Soaring AI Spending

Core Viewpoint - Meta Platforms, Inc. reported strong Q3 results, exceeding revenue and operating income estimates, but rising AI-related expenditures have tempered near-term margin outlook [1][2][3] Financial Performance - Q3 revenue and operating income were up 4% and 5% respectively compared to consensus estimates, driven by strong pricing and volume growth [3] - The Q4 revenue guidance is 3% above consensus estimates, reflecting AI-driven gains in engagement and monetization [3] Capital Expenditure and Operating Expenses - Meta has raised its capital expenditure and operating expense guidance for 2025, indicating an acceleration in operating expense growth and higher year-over-year capital expenditure growth due to increased AI infrastructure spending [2][3] - The price target for Meta's stock has been adjusted to $810 from $875 while maintaining a Buy rating [1][3] Strategic Focus - The company is expanding its advertising capabilities and making significant investments in artificial intelligence and the metaverse [3]