Meta Platforms (META) shares are down nearly 10% this morning even though the tech behemoth came in ahead of Street estimates for its third quarter. The price action primarily reflects growing concern over the company’s aggressive spending plans tied to its artificial intelligence (AI) ambitions. More News from Barchart Meta now expects its capital expenditures to fall between $70 billion and $72 billion, up from its previous outlook for $66 billion to $72 billion. Despite the post-earnings decline, ME ...

ToplineMeta shares dropped by more than 12% as trading opened Thursday, pacing what would be the company’s largest single-day loss in years after a nearly $16 billion tax charge lowered its quarterly earnings well below Wall Street’s forecasts. Earnings fell significantly below Wall Street’s expectations, though Meta said it would have exceeded projections before the tax charge.Getty ImagesKey FactsShares of Meta fell 12.3% to around $658.50 after the bell rang Thursday morning, the largest intraday loss fo ...

Upgrades - Barclays upgraded Verisk Analytics (VRSK) to Overweight from Equal Weight with a price target of $275, down from $310, citing that long-term headwinds are temporary/manageable within a 6%-8% growth range [2] - Stephens upgraded C.H. Robinson (CHRW) to Overweight from Equal Weight with a price target of $173, up from $135, following a solid Q3 adjusted EPS beat due to productivity gains [3] - Telsey Advisory upgraded Steven Madden (SHOO) to Outperform from Market Perform with a price target of $43, believing that Kurt Geiger will complement the existing business and position the company well for potential cyclical improvements in the fashion segment [4] - Rothschild & Co Redburn upgraded Warner Bros. Discovery (WBD) to Buy from Neutral with a price target of $28, arguing that a $27-$30 takeout price seems reasonable as the company is up for sale [5] - H.C. Wainwright double upgraded Coinbase (COIN) to Buy from Sell with a price target of $425, up from $300, citing a bullish outlook for crypto asset prices in Q4 and favorable regulatory conditions [5] Downgrades - Oppenheimer downgraded Meta Platforms (META) to Perform from Outperform without a price target, noting significant investments in superintelligence despite unknown revenue opportunities [6] - Deutsche Bank downgraded Boeing (BA) to Hold from Buy with a price target of $240, down from $255, cutting free cash flow estimates through 2028 by up to 56% following the earnings report [6] - Evercore ISI downgraded Etsy (ETSY) to In Line from Outperform with a price target of $73, up from $72, indicating that the algorithm may lose appeal and predicting margin contraction and modest adjusted EBITDA decline in 2026 [6] - UBS downgraded Fiserv (FI) to Neutral from Buy with a price target of $75, down from $170, due to a reset in the near- to medium-term outlook and increased uncertainty [6] - Barclays downgraded FMC (FMC) to Equal Weight from Overweight with a price target of $22, down from $48, citing soft results and limited visibility on earnings along with a surprise cut in its dividend [6]

Core Insights - Meta is forecasting "notably larger" capital expenses for the next year due to significant investments in AI, alongside a nearly $16 billion one-time charge that negatively impacted its third-quarter profit [1][8] - The company's third-quarter revenue grew by 26%, but this was overshadowed by a 33% increase in costs, which pressured profit margins [2] - Meta's capital expenditure is now expected to be between $70 billion and $72 billion for the year, up from a previous forecast of $66 billion to $72 billion [4][6] Financial Performance - Excluding the one-time charge, Meta's third-quarter net income would have been between $15.93 billion and $18.64 billion, compared to the reported net income of $2.71 billion [1][8] - The increase in costs is largely attributed to employee compensation, particularly for AI talent, which is expected to be the second-largest contributor to rising expenses [4][9] AI Investments - Meta has committed to substantial investments in AI, aiming for superintelligence, which involves building massive AI data centers [2][11] - The company has reorganized its AI efforts under the Superintelligence Labs unit to enhance decision-making and streamline operations [8][9] - Major tech companies, including Meta, are projected to spend a total of $400 billion on AI infrastructure this year, raising concerns about an AI bubble [10] Advertising and Market Position - Meta continues to leverage its extensive user base to drive ad revenue, utilizing an AI-optimized ad platform to enhance marketing effectiveness [5] - The company has expanded its advertising efforts on platforms like WhatsApp and Threads, competing directly with rivals such as X and TikTok [7]

Meta Platforms (NasdaqGS:META) Q3 2025 Earnings Call October 29, 2025 04:30 PM ET Company ParticipantsMark Zuckerberg - CEOKenneth Dorell - Director of Investor RelationsSusan Li - CFOConference Call ParticipantsDoug Anmuth - AnalystEric Sheridan - AnalystRoss Sandler - AnalystJustin Post - AnalystBrian Nowak - AnalystYoussef Squali - AnalystKen Gawrelski - AnalystMark Shmulik - AnalystRonald Josey - AnalystMark Mahaney - AnalystOperatorGood afternoon. My name is Krista, and I will be your conference operat ...

Financial Data and Key Metrics Changes - Q3 total revenue reached $51.2 billion, up 26% year over year, with family of apps revenue at $50.8 billion, also up 26% [13][14] - Q3 operating income was $20.5 billion, representing a 40% operating margin [15] - Net income was $2.7 billion, or $1.05 per share, with a one-time tax charge impacting the tax rate, which was 87% [16] Business Line Data and Key Metrics Changes - Family of apps ad revenue was $50.1 billion, up 26%, with a 14% increase in ad impressions served [13][14] - Reality Labs segment revenue was $470 million, up 74% year over year, driven by Quest headset sales and AI glasses [14] - Average price per ad increased by 10% year over year, benefiting from improved ad performance [13] Market Data and Key Metrics Changes - Over 3.5 billion people used at least one Meta app daily, with Instagram reaching 3 billion monthly active users [3][13] - Video time spent on Instagram increased by over 30% since last year, with Reels achieving an annual run rate of over $50 billion [6][7] Company Strategy and Development Direction - The company aims to establish itself as a leading AI lab, focusing on building personal superintelligence and enhancing app experiences [3][4] - There is a strong emphasis on advancing AI recommendation systems to improve user engagement and ad performance [6][8] - The company is investing heavily in infrastructure to support AI initiatives, with capital expenditures expected to grow significantly [30][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth of ad revenue and user engagement, driven by ongoing improvements in recommendation systems [17][18] - The company anticipates a reduction in Reality Labs revenue in Q4 due to the timing of headset sales [29] - Future investments will focus on AI capabilities and infrastructure to meet expanding compute needs [32] Other Important Information - The company ended Q3 with $44.4 billion in cash and marketable securities, and $28.8 billion in debt [17] - The tax rate for Q4 is expected to be between 12% to 15% [30] Q&A Session Summary Question: Insights on core improvements and CapEx - Management highlighted that growth in CapEx for 2026 is driven by needs in Meta Superintelligence Labs and core AI, with strong year-over-year growth in value-weighted conversion rates [37][39] Question: Reality Labs revenue headwind - Management noted that Q4 Reality Labs revenue is expected to be lower due to the absence of new headset launches and the timing of sales [40][41] Question: CapEx and expense growth impact on earnings - Management is in the process of budgeting for 2026, emphasizing the need for capacity to support AI initiatives and core business growth [44][45] Question: Consumer interaction with Meta AI - Management reported over a billion monthly users of Meta AI, with improvements in model quality leading to increased usage [54][55] Question: Adoption rates of automation tools - Management discussed the successful rollout of Advantage Plus, which automates campaign setup and optimizes ad performance [84]

Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was $51.2 billion, up 26% year over year, with a constant currency growth of 25% [13][15] - Family of apps revenue reached $50.8 billion, also up 26% year over year, with ad revenue contributing $50.1 billion, reflecting a 26% increase [13][14] - Operating income was $20.5 billion, resulting in a 40% operating margin [16] - Net income was reported at $2.7 billion, or $1.05 per share, with a potential adjusted net income of $18.6 billion or $7.25 per share excluding a one-time tax charge [17] - Total expenses increased by 32% year over year to $30.7 billion, driven by legal expenses, employee compensation, and infrastructure costs [15][16] Business Line Data and Key Metrics Changes - Reality Labs segment revenue was $470 million, up 74% year over year, attributed to increased sales of Quest headsets and AI glasses [14] - Other revenue from the family of apps, including WhatsApp paid messaging and Meta verified subscriptions, grew by 59% to $690 million [14] - The annual run rate for video content on Instagram Reels surpassed $50 billion, with video time spent on Instagram increasing by over 30% since last year [6][14] Market Data and Key Metrics Changes - Daily active users across Meta's family of apps reached 3.5 billion, with Instagram achieving 3 billion monthly active users [3][13] - Threads app saw a significant increase, surpassing 150 million daily active users [3] - Engagement on Facebook increased by 5% and 10% on Threads due to improved AI recommendation systems [5][19] Company Strategy and Development Direction - The company aims to establish itself as a leading AI lab, focusing on building personal superintelligence and enhancing app experiences [3][4] - There is a strong emphasis on advancing open-source AI, which is expected to benefit the entire ecosystem [3] - The strategy includes front-loading capacity for AI development to prepare for potential rapid advancements in superintelligence [4][5] - The company is also focused on integrating AI into its advertising systems to improve performance and efficiency [8][24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth potential in AI and its applications across existing and new products [11][32] - The company anticipates continued strong ad revenue growth, although Reality Labs revenue is expected to decline in Q4 due to last year's product launch timing [30][34] - There are concerns regarding legal and regulatory challenges, particularly in the EU and U.S., which could impact future revenue [34] Other Important Information - Capital expenditures for 2025 are projected to be between $70 to $72 billion, reflecting increased investments in infrastructure and AI capabilities [31][33] - The company ended Q3 with $44.4 billion in cash and marketable securities, indicating a strong financial position [18] Q&A Session Summary Question: Can you provide insights on the early quantifiable signals from A/B tests regarding core improvements for 2026? - Management highlighted strong year-over-year growth in value-weighted conversion rates, indicating confidence in the return on investment from capital expenditures [38][40] Question: What is the expected Reality Labs revenue headwind in Q4? - Management noted that Q4 Reality Labs revenue is expected to be lower than last year due to the timing of product launches and inventory management [41] Question: How does the company plan to balance CapEx growth with core business growth and free cash flow? - The focus is on ensuring sufficient compute capacity for AI research and core business needs, with flexibility for future growth [44][46] Question: What signals are being observed regarding consumer interaction with Meta AI? - Over a billion monthly users are engaging with Meta AI, with increased usage correlating with model improvements [53][55] Question: How is the company approaching the monetization path for Meta AI? - Management is optimistic about improving engagement and monetization through enhanced AI capabilities and automation for advertisers [74][76]

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]

By Jaspreet Singh and Echo Wang (Reuters) -Meta on Wednesday forecast "notably larger" capital expenses next year thanks to investments in artificial intelligence, including aggressively building data centers to power its AI push. The Facebook and Instagram parent reported third-quarter revenue growth of 26% that beat market estimates, but that jump was outpaced by a ​32% increase in costs. Shares of the company - that have risen 28% so far this year - fell 8% after the bell, as Wall Street digested Zuc ...

The concern is if you create entities that are more powerful than human beings and you have no idea how to maintain power over them, uh then you're just asking for trouble. I think pretty much every American understands that. Uh and the polls are extremely lopsided uh against proceeding with super intelligence. Um, when we look at this from a technical point of view, the basic problem is not only are we trying to build these systems that are more powerful than us, um, but we actually have no idea how the sy ...