Meta Platforms delivered a solid third-quarter performance powered by its AI and advertising businesses, but a massive one-time tax expense overshadowed what would have otherwise been one of the company’s strongest quarters.
The company reported revenue of $51.24 billion, a 26% increase year-over-year, fueled by a 14% jump in ad impressions and a 10% rise in average ad prices. However, net income plunged 83% to $2.7 billion, due to a non-cash tax charge of $15.93 billion linked to the implementation of the One Big Beautiful Bill Act. Excluding that charge, Meta’s net income would have reached $18.64 billion, with earnings per share of $7.25 instead of the reported $1.05.
CEO Mark Zuckerberg called the quarter “strong” and emphasized the company’s momentum in artificial intelligence, saying Meta Superintelligence Labs is “off to a great start” and highlighting Meta’s leadership in AI-powered smart glasses.
AI and Ad Revenue Fuel Growth
Meta’s Family of Apps segment, which includes Facebook, Instagram, WhatsApp, and Messenger, generated $50.8 billion in revenue, up from $40.3 billion last year. Reality Labs, the division behind Meta’s AR and VR initiatives, contributed $470 million, up from $270 million a year ago.
The company’s daily active user base climbed to 3.54 billion, up 8% year-over-year, reflecting continued engagement across its platforms. Meta’s ad engine remains its primary revenue driver, and the company credited its improved AI-driven targeting tools and organic engagement for the robust growth.
Rising Costs and Expanding Infrastructure
Operating expenses grew 32% year-over-year to $30.7 billion, driven by higher research and development spending, which rose to $15.1 billion. Meta continues to pour resources into expanding its compute infrastructure to support growing AI workloads.
Capital expenditures reached $19.37 billion, reflecting heavy investment in AI data centers and hardware. CFO guidance suggests this figure could rise further in 2026 as Meta expands capacity both internally and through third-party cloud providers.
Outlook: Growth Ahead, But Higher Spending Expected
For the fourth quarter of 2025, Meta expects revenue between $56 billion and $59 billion, citing ongoing ad strength but softer Reality Labs sales after an earlier inventory shift. The company forecasts full-year expenses of $116–118 billion, up from prior estimates, and capital expenditures of $70–72 billion.
Looking to 2026, Meta warned that spending will accelerate sharply, primarily due to infrastructure expansion and AI talent acquisition. Employee compensation is also expected to rise as Meta completes full-year salary recognition for recent hires.
Regulatory Headwinds Loom
Meta continues to face scrutiny from regulators in both the U.S. and the EU. The company noted that possible changes to its Less Personalized Ads offering could hurt European revenue as soon as this quarter. Additionally, several youth-related trials in the U.S. are set for 2026, which could result in material financial losses.
Technical View: Key Support Near $680
After hours, Meta stock broke below short-term support near $700, signaling potential downside toward the $680–$670 zone, where it last consolidated in June. The RSI has dropped near neutral levels at 48.8, while the MACD shows weakening momentum after a recent recovery attempt.
If selling pressure continues, traders may look for support around $569, the next major historical floor. On the upside, resistance remains at $750, which previously capped Meta’s summer rebound.
Building the Future of AI and Connection
Despite these challenges, Meta remains optimistic. Zuckerberg said the company is “entering one of the most exciting periods in its history,” as Meta’s AI innovations and immersive technologies reshape how people connect.
With massive infrastructure investments, a growing AI ecosystem, and an unmatched global user base, Meta is betting big that its next chapter will be defined not just by social media—but by AI-powered interaction at scale.
