Meta shares fall more than 5% as AI cost concerns mount
Key Facts
Meta shares fell more than 5% in early trading on October 22, 2026, according to Reuters, as investors weighed growth in its "Muse" service against concerns over rising artificial intelligence costs. The decline followed quarterly results in which revenue exceeded analysts' expectations while earnings missed their estimates, according to Associated Press market coverage. Concerns over AI spending also spread to credit markets, according to Reuters, affecting trading linked to the company's debt. The cost of insuring Meta's debt against default rose to a record high, the agency reported. Despite the market pressure, at least 13 brokerages raised their price targets for the stock after the results, according to London Stock Exchange Group data cited by Reuters.
Meta's revenue in the third quarter of 2026 reached about $64.60 billion, according to the Associated Press, exceeding analysts' estimates of $63.34 billion for the same period. Revenue grew 26% year on year, the agency reported. That compares with revenue of $51.24 billion in the third quarter of 2025. The company posted quarterly net income of $9.86 billion, or $3.83 per share, according to the Associated Press. In its AI business, Zuckerberg said on the earnings call that more than 10 million people in the United States and Canada had created accounts to use "Muse". He added that about 25% of those who had set up the service used it on any given day, according to the agency.
On investment, Meta's capital expenditure totaled about $34.9 billion in the third quarter of 2026, according to Investing's coverage of the earnings call. That amount includes principal payments on finance leases, according to figures the company presented on the call. Free cash flow recorded a deficit of about $2.1 billion over the same period, according to the coverage. For historical comparison, Meta had projected capital expenditure of between $70 billion and $72 billion for 2025 when it announced its third-quarter results that year, according to the Associated Press. Its latest forecast for 2026 puts annual capital expenditure at between $135 billion and $145 billion, according to Investing.
On the legal front, the New Mexico Department of Justice announced on October 21, 2026, that an order had been issued requiring Facebook to pay $25 billion in civil penalties. The order concerns the Cambridge Analytica case, according to the department's statement on the ruling. The department said the penalties were imposed for violations of the state's Unfair Practices Act. Before the amount was determined, a jury found that "Facebook committed 43,899,725 violations of New Mexico law," according to the statement. New Mexico had chosen to pursue the company independently and did not join the multistate settlement, according to the Associated Press. Meta's chief legal officer, CJ Mahoney, said in a statement carried by the agency: "We are confident we will prevail on appeal."
Looking ahead, Meta expects revenue of between $73 billion and $76 billion in the fourth quarter of 2026, according to guidance reported by Investing. For the full year, the company expects expenses of between $175 billion and $179 billion, according to the site's coverage of the earnings call. The annual expense range reflects the charge associated with the legal settlement, according to the company's announcement on the call. For capital expenditure, the company's previous forecast range for 2026 was between $130 billion and $145 billion, according to Investing. Meta narrowed that range by raising the lower end while keeping the upper end of its annual forecast unchanged.