Key Highlights

● Meta's future commitments rose to about $825 billion from about $700 billion in July.

● Meta narrowed its 2026 capital spending forecast to $135 billion to $145 billion.

● Meta reported record revenue of $64.6 billion, above consensus of about $63.3 billion.

● About two of every three S&P 500 stocks rose as money moved into defensive groups.

For two years, the debate over artificial intelligence spending centered on annual capital expenditure budgets. On Thursday, October 22, Meta Platforms (NASDAQ:META) gave investors a much bigger number to think about.

The company's future lease and contract commitments rose to about $825 billion, up from about $700 billion in July, according to reports. Shares of Meta sank to trade at $648.85, their worst day since July, erasing about $108 billion in market value by midday.

The selloff spread. The Nasdaq Composite fell 694 points to 26,008.86, its steepest drop since June 5, and the S&P 500 slid 93.74 points to 7,663.43.

Beyond the annual budget

Meta narrowed its 2026 capital expenditure forecast to $135 billion to $145 billion, raising the low end from $130 billion. That alone is a vast sum. But the commitments figure covers future lease and contract obligations stretching well beyond a single year.

A separate analysis cited a narrower measure of $454.52 billion in non-cancelable commitments. Either way, the disclosures suggested Meta has committed to substantial spending for years ahead.

Strong business, heavy outlay

The core business looked healthy. Revenue reached a record $64.6 billion, ahead of consensus of about $63.3 billion, and fourth-quarter revenue guidance of $73 billion to $76 billion topped expectations. The quarter included a legal charge of about $10 billion tied to a settlement, according to reports. Headcount fell to 66,775.

But free cash flow turned negative at $2.12 billion, the first cash outflow in more than a decade, according to reports. The cost of insuring Meta's debt hit a record.

Chief executive Mark Zuckerberg struck a confident tone in the release. "We hit major milestones this quarter toward delivering personal superintelligence for everyone," he said, adding, "Our investments are paying off, the core business is strong, and we're seeing velocity across the board."

The bull and bear cases

Analysts stayed largely supportive. "In our view, Meta is entering a capex harvest cycle," one analyst said. One bank kept an Overweight rating and raised its target to $940 from $920. Another reiterated Buy with a $845 target, a third lifted its target to $800 from $700, and a fourth kept a Buy rating.

Skeptics focused on the bigger picture. IBM (NYSE:IBM) CEO Arvind Krishna said customers are "getting worried if some of the AI spending is completely out of control with no real return." Nvidia (NASDAQ:NVDA)'s Jensen Huang said "The demand of the capital is much greater than the availability of the capital."

A market-wide reframing

The effect stretched far beyond Meta. Chipmakers, AI power suppliers and neocloud operators all fell as investors reconsidered how the AI build-out will be financed. The Philadelphia Semiconductor Index had its biggest one-day drop since June 23.

"Every index on the planet is basically an AI index," one fund manager said, a reminder of how concentrated markets have become.

Yet breadth was positive. About two of every three S&P 500 stocks rose, according to market data, as money moved into staples, health care and other defensive groups.

2027 Spending Plans Draw Scrutiny

Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) report on October 28 and Amazon (NASDAQ:AMZN) on October 29. Investors will compare their spending commitments with Meta's and look for clearer evidence of AI revenue. Meta's CFO Susan Li said the company is "quite early in developing our budget and capacity plans for next year," so any update on 2027 spending will draw close attention.