Meta Reports 26% Revenue Surge as AI Investments Squeeze Earnings

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Meta Platforms, Inc., the parent company of Facebook, Instagram, WhatsApp, and Messenger, posted solid revenue growth in the third quarter, but profits were sharply weighed down by rising costs and a substantial tax expense.

The company posted $51.24 billion in revenue for the quarter ending 30 September, a 26% year-on-year increase, supported by continued advertising growth across its platforms. Operating income reached $20.54 billion, reflecting steady engagement across its global user base.

Daily active users across Meta’s platforms rose 8% to 3.54 billion, while ad impressions increased 14% and average ad prices were up 10%. The company credited improved targeting and campaign efficiency powered by artificial intelligence for the performance.

Despite higher revenue, Meta’s net income dropped to $2.71 billion from $11.58 billion a year earlier, as the company absorbed a $15.93 billion non-cash tax charge tied to new US tax legislation. Without the one-time item, Meta said adjusted profit would have been $18.64 billion, or $7.25 per share, instead of the reported $1.05.

Rising AI and Infrastructure Costs

Meta’s capital expenditure rose to $19.37 billion during the quarter, reflecting ongoing investment in data centers and AI infrastructure. The company raised its annual capital spending forecast to between $70 billion and $72 billion, up from earlier guidance.

Chief Financial Officer Susan Li said investment levels in 2026 would be “notably higher” as Meta expands computing capacity and hires more AI engineers. Total expenses are also expected to rise next year.

The company’s shares dropped nearly 9% in early trading following the results, as investors reacted to the prospect of continued high spending and tighter margins.

Chief Executive Mark Zuckerberg said the company is entering a crucial phase for AI and is preparing for long-term shifts in the technology landscape.

Focus on Advanced AI Research

Zuckerberg reaffirmed Meta’s goal to develop more advanced AI systems through its Meta Superintelligence Labs, established earlier this year. He told analysts that the company is “aggressively front-loading” compute infrastructure to prepare for a future where AI may outthink humans. “If superintelligence arrives sooner, we’ll be ideally positioned for a generational shift. If it takes longer, the extra compute will accelerate our core business,” he said.

Meta is among the biggest buyers of Nvidia’s AI chips and continues to recruit top talent from rivals such as OpenAI and Google DeepMind. Employee headcount rose 8% to 78,450 as the company resumed hiring after last year’s restructuring.

Reality Labs Still in Loss

Meta’s Reality Labs division, which develops virtual and augmented reality devices, posted an operating loss of $4.43 billion, roughly unchanged from last year. The company expects weaker revenue from the unit in the final quarter as it moves beyond last year’s hardware launches.

Despite the losses, Meta continues to view AR and AI integration as core to its future, with ongoing development of AI-powered smart glasses and immersive social experiences.

Future Growth and Challenges 

For the fourth quarter, Meta projected revenue between $56 billion and $59 billion, consistent with analysts’ expectations of $57.25 billion, driven by continued ad demand and new monetization features on WhatsApp and Threads.

However, the company flagged regulatory scrutiny in the US and Europe as potential headwinds, alongside investor unease over ballooning AI spending.