Meta Platforms Reports 26% Revenue Growth in Third Quarter

Meta Platforms has reported a significant surge in revenue, with the company's third-quarter takings reaching $64.6 billion - a 26% year-over-year increase that outpaced analyst expectations.

The upward trend is attributed to various factors, including the growing demand for Meta's core products and services. The company's recent investments in artificial intelligence (AI) have also shown promising results, with its newly released Muse agent being one of the highlights.

In a prepared statement, Mark Zuckerberg expressed confidence in the company's growth prospects, citing "velocity across the board" as a key driver of revenue expansion. His optimism was echoed by investors, who responded positively to the news by sending shares soaring over 5% in after-hours trading on Wednesday.

Meta's revenue forecast for the final quarter of the year has been set at between $73 billion and $76 billion, outpacing analyst expectations of $73.75 billion. The company's ability to meet or exceed these targets will be closely watched by investors and analysts alike.

However, Meta's operating income took a hit in the third quarter due to a significant settlement with a group of attorneys general over youth safety concerns. The company agreed to pay around $10 billion towards this settlement, which is expected to have a long-term impact on its financials.

Meta's net income for Q3 reached a staggering $9.9 billion, translating to earnings per share of $3.83. This represents a significant increase from last year's $2.7 billion and $1.05 per share.

The company is pouring massive amounts of capital into its artificial intelligence (AI) infrastructure and services, joining the likes of Alphabet, OpenAI, and Microsoft in a high-stakes race to develop advanced AI models. To fuel this effort, Meta will redirect investments from its struggling virtual reality division, Reality Labs.

Meta's capital expenditures skyrocketed to $34.9 billion, surpassing $31 billion in Q2 and last year's $19.4 billion. The company has slightly adjusted its full-year capex guidance, pegging it between $135 billion and $145 billion, a modest tweak from the previous range of $130 billion to $145 billion.

Analysts are closely monitoring Meta's spending habits, with some expressing concerns about how these investments will translate into shareholder returns. According to Melissa Otto, global head of Visible Alpha research at S&P Global, consensus capex for 2026 has risen by over $14 billion since April, reaching nearly $140 billion, almost double last year's figure.

Tech infrastructure spending is expected to continue its upward trajectory in 2026, with overall capital expenditures projected to reach a staggering $790 billion. This represents a near-doubling of last year's total and sets the stage for even more dramatic increases in the years ahead.

Meta's financial woes continue to mount as the company's free cash flow took a significant hit in recent quarters, plummeting to a negative $2.1 billion from $784 million in the second quarter and a substantial $10.6 billion a year ago.

The company is also facing billions in penalties related to the Cambridge Analytica data privacy scandal, with a New Mexico judge ordering Meta to pay $25 billion just hours before its latest financial results were announced. This penalty could have been even higher, as a jury had previously found more than 43 million violations, potentially resulting in a staggering nearly $220 billion fine. Despite plans to appeal this decision, the company's financial outlook remains uncertain.