“Our AI investments are paying off,” CEO Zuckerberg said.
- Revenue jumped 26% to $64.60 billion for the quarter, beating expectations of $63.4 billion.
- Net income reached $3.83 per share, which was impacted by a $9.89 billion legal charge, leading to an earnings miss compared to expectations of $5.46 a share.
- Meta’s board approved a new class of non-voting Class C common stock to be distributed via a one-time stock dividend that effectively acts as a 2-for-1 stock split.
Meta Platforms Inc. (META) share price gained 5% after-hours after the Instagram owner reported a 26% surge in third-quarter revenue Wednesday, buoyed by robust digital advertising demand and progress in its artificial intelligence initiatives.
However, the tech giant’s bottom line was tempered by a multibillion-dollar legal settlement, even as it raised its capital expenditure targets and announced plans for a new stock structure.
The Facebook owner generated $64.60 billion in revenue for the three months ended Sept. 30, up from $51.24 billion in the same period last year and above analyst expectations of $63.4 billion.
Net income rose to $9.86 billion, or $3.83 per diluted share, compared with $2.71 billion, or $1.05 per share, a year earlier. However, the earnings included a $9.89 billion charge associated with an agreement reached in August with 52 U.S. state attorneys general to settle litigation regarding teen mental health and social media. Excluding that charge, diluted earnings per share would have been $7.40 and operating income would have reached $22.88 billion.
“We hit major milestones this quarter toward delivering personal superintelligence for everyone,” chief executive officer Mark Zuckerberg said in a statement. “Our investments are paying off, the core business is strong, and we’re seeing velocity across the board.”
Meta’s newly launched Muse AI surpassed 10.9 million downloads (10.2 million in the U.S.) within 40 days since its launch in September.
New Stock Structure For AI Expansion
In a major corporate governance move, Meta announced that its board of directors approved the creation of a new class of publicly listed, non-voting Class C common stock, set to take effect in January 2027.
Under the structure, shareholders will receive a one-time stock dividend of one Class C share for each Class A or Class B share held, effectively acting like a 2-for-1 stock split without altering existing voting control.
The company said the Class C stock will provide flexibility to raise capital, structure employee compensation, and fund potential acquisitions as it navigates an increasingly competitive landscape for artificial intelligence technology.
Escalating AI Capital Spending
Meta narrowed and raised the lower end of its 2026 capital expenditures guidance to $135 billion to $145 billion, up from a previous baseline of $130 billion. The increased spending plan underscores Zuckerberg’s strategy of building massive compute capacity to power frontier AI models.
The company recently launched Muse, a consumer-focused personalized assistant, alongside Muse Wonder, its premier frontier model designed for complex coding, legal, and financial queries. Executives signaled that AI-driven enhancements to ad targeting and engagement algorithms are already driving revenue growth across Meta’s app family.
For the fourth quarter of 2026, Meta projects total revenue between $73 billion and $76 billion.
Operational Metrics and Segment Performance
Family daily active people across Meta’s suite of apps that includes Facebook, Instagram, WhatsApp, and Threads, averaged 3.64 billion in September, representing a 3% increase year-over-year. Ad impressions delivered grew by 10%, while the average price per ad jumped 14%.
Total company headcount stood at 66,775 as of Sept. 30, reflecting a 15% reduction from the previous year. Meanwhile, Meta reported that operating losses in its Reality Labs hardware and metaverse division are expected to shrink to between $18 billion and $19 billion for 2026, with loss narrowing continuing into 2027 as capital is reallocated toward core AI development.
META Stock: Retail View
Retail sentiment on Stocktwits was ‘bullish’ with ‘high’ message volumes.
META stock has gained about 6% year-to-date. The Invesco QQQ has gained about 17%.
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