Meta Shares Fall 7% as 2026 Capital Spending Forecast Rises to $145 Billion
Key Facts
Meta shares fell 7% on Thursday, October 22, after the company reported third-quarter results and narrowed its 2026 capital spending forecast to $135–145 billion, from the previous range of $130–145 billion. The decline came despite revenue topping analysts’ expectations, with the company reporting $64.60 billion against an expected $63.34 billion. The Associated Press said the stock fell after the company reported stronger-than-expected revenue, while profit came in below analysts’ expectations. Meta said the results reflected continued expansion in its core business and AI initiatives, as investment requirements increased. The stock closed at $642.62 on October 23, according to EL7 data.
Meta’s third-quarter expenses rose 68% year over year to $51.613 billion, while operating income fell 37% to $12.988 billion. The divergence between revenue growth and cost pressures highlights the financial impact of the company’s expansion. Meta also posted negative free cash flow of $2.12 billion for the quarter, compared with positive cash flow in the same period a year earlier, according to Reuters via Investing.com. That puts elevated capital spending alongside a decline in cash available after operating and investment expenses. The combination heightened market sensitivity to the cost of financing AI infrastructure, despite strong quarterly revenue.
The company raised its 2026 total expense forecast to a range of $175–179 billion, after adding a $9.9 billion legal charge to its estimate, according to Meta’s filing with the U.S. Securities and Exchange Commission. That figure differs from capital expenditures, which are in a range of $135–145 billion: the former covers projected total expenses, while the latter refers to capital spending. In its core business, the average number of daily active users across Meta’s apps reached 3.64 billion in September, up 3% year over year. Ad impressions rose 10%, and the average price per ad increased 14% in the third quarter. These metrics indicate that user growth and improved advertising coincided with expanding spending, as the company faces the task of turning AI investments into commercial returns.
Chief Executive Mark Zuckerberg said the company reached important milestones during the quarter, including the launch of “Muse” and “Muse Wonder,” which he described as “our first two advanced models.” Meta says its AI investments support advertising revenue by improving engagement, recommendations and monetization efficiency. But it warned that these investments will take longer to generate returns than investments in its core business. That longer time frame comes as expenses have risen and free cash flow has swung to a deficit, making the timing of returns central to investors’ assessment of the expansion. The Associated Press’ coverage noted that the stock fell despite revenue growth, as profit came in below analysts’ expectations.
Meta did not provide an estimate for 2027 expenses, but said it expects to continue investing heavily to support its core business and AI initiatives. For the fourth quarter of 2026, the company expects revenue of between $73 billion and $76 billion, a range whose midpoint is above analysts’ forecast of $73.65 billion. The outlook gives investors a near-term indicator of the revenue trajectory, while next year’s spending level remains unquantified. Third-quarter revenue was $64.60 billion, compared with $51.24 billion in the same period a year earlier, a 26% annual increase, according to the Associated Press. The company’s ability to sustain advertising growth alongside its AI investments and related costs will remain a key focus in its upcoming results.