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Meta beats earnings but AI spending skepticism clouds stock surge

22 October 2026 · Source balance: Centre

Meta reported stronger-than-expected third-quarter results, posting 64.6 billion dollars in revenue, up 26 percent year-over-year, and beating Wall Street estimates. The company's advertising business showed strength, with a 14 percent increase in average ad prices and 10 percent more ad impressions. However, meta is raising concerns with massive capital expenditures. The company now projects 2026 AI spending between 135 and 145 billion dollars, up from the prior 130 to 145 billion range. In Q3, capital expenditures hit 34.91 billion dollars, causing free cash flow to turn negative 2.12 billion for the first time in over a decade. Meta's new Muse AI assistant gained 10.9 million downloads in six weeks, suggesting AI products are gaining traction. The company also announced a new non-voting stock class to fund expansion. While management highlighted strong AI momentum, investors remain divided on whether these enormous spending commitments will generate sufficient returns.

Key facts

  • Meta Q3 revenue was 64.6 billion dollars, up 26 percent year-over-year, exceeding analyst expectations of 63.3 billion
  • Earnings per share reached 3.83 dollars, beating the consensus estimate of 3.57 dollars
  • Capital expenditures totaled 34.91 billion dollars in Q3, more than double the prior-year quarter
  • Meta raised its 2026 AI capex guidance to 135 to 145 billion dollars from a prior range of 130 to 145 billion
  • Free cash flow turned negative 2.12 billion dollars in Q3, the first quarterly cash burn since 2012
  • Meta's Muse AI assistant reached 10.9 million downloads in approximately six weeks after September launch
  • Average advertising price increased 14 percent globally while ad impressions grew 10 percent year-over-year
  • Meta took a 9.89 billion dollar legal charge related to youth mental health settlement with state attorneys general
  • Operating margin declined to 20 percent from 40 percent year-over-year, partly due to legal charge and infrastructure costs
  • Company announced plans for a new non-voting Class C stock split to maintain CEO control while funding AI expansion

How different outlets framed it

Left-leaning coverage: Progressive critics highlight structural concerns with Meta's business model and regulatory vulnerabilities. Left-leaning perspectives focus on the unresolved youth mental health settlement, noting the 9.89 billion dollar charge merely addresses past harms without fundamentally changing Meta's addiction-based advertising model. They argue the company remains structurally incentivized to exploit young users, and that regulatory risks from antitrust enforcement and data privacy laws pose ongoing financial threats that could exceed current expectations.

Right-leaning coverage: Conservative and business-focused outlets stress free-market dynamics and shareholder value concerns. Right-leaning perspectives emphasize Meta's need to defend its massive spending as a rational competitive response to other tech giants, noting the company has proven execution capability and that AI leadership justifies the investment. They worry less about regulation and more about whether management can deliver ROI, viewing the Muse early adoption and advertising improvements as vindication of Zuckerberg's strategic vision.

Limits of this briefing

This story involves a complex mix of strong operational performance offset by significant financial sustainability questions. Some perspectives focused primarily on antitrust or regulatory risks which remain uncertain, while others emphasized early AI product traction that is difficult to project into future revenue. The stock market's immediate reaction was volatile and split, suggesting genuine disagreement about whether current spending levels are justified.

Sources

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