Meta revenue tops forecasts as AI costs and legal charges weigh on profit
Meta reported third-quarter revenue of $64.6 billion, up 26% and above analyst estimates, and forecast $73 billion to $76 billion for the current quarter. Operating income fell 37% to $13 billion after a $10 billion youth-safety settlement charge, while heavy AI spending pushed free cash flow negative. The company plans a new stock class to raise money for AI and said it will monetize its Muse AI agent.
Meta's quarterly sales reached $64.6 billion, a 26% increase that exceeded the $63.3 billion consensus, and it guided current-quarter revenue to $73–$76 billion. A $10 billion youth-safety settlement cut operating profit to $13 billion; excluding that charge, operating profit would have been $22.9 billion and EPS $7.40.
Capital spending rose to $34.9 billion from $31 billion in the prior quarter and $19.4 billion a year earlier, leaving free cash flow at negative $2.1 billion. Meta also disclosed a planned non-voting class C stock and said it would shift some Reality Labs investment toward AI; its Muse assistant has surpassed 10 million U.S. and Canadian setups.
Meta’s spending shift toward AI and new stock financing could affect investors through dilution and cash-flow volatility, while advertisers and users may see more AI-mediated commerce. The youth-safety settlement may shape how platforms design products for minors and how parents and regulators assess accountability. Employees and communities tied to Reality Labs could face reallocation effects. Because costs are large and legal outcomes uncertain, near-term effects may be uneven across shareholders, users, and platform workers.