Key Highlights

  • Meta (NASDAQ: META) slipped 0.6% in premarket trading after reporting higher earnings and revenue.
  • Revenue grew 26% to $64.6 billion; earnings were $3.83 a share against the $3.57 expected.
  • Results included a $9.89 billion legal charge tied to a settlement with 52 state attorneys general.
  • Meta announced a 2-for-1 split with a new class of non-voting stock and narrowed its capex range.

Meta Platforms Inc. (NASDAQ: META) slipped 0.6% in premarket trading on Thursday, giving back gains from extended trading after the company reported higher third-quarter earnings and revenue and gave a stronger-than-expected outlook.

Other premarket tallies showed a larger decline of more than 1%, after shares had risen 1% to 2% in extended trading on Wednesday. The mixed reaction illustrates how the market is treating AI-exposed earnings: beating estimates is no longer enough.

The Numbers

Revenue rose 26% to $64.6 billion, above Wall Street estimates and above the top of the company’s guided range of $61 billion to $64 billion. Earnings were $3.83 a share, above the $3.57 analysts expected, according to MoneyCheck. The results include a $9.89 billion legal charge related to a settlement with 52 state attorneys general over teen mental health litigation, Investing.com reported. The company also forecast revenue for the current quarter that was stronger than expected.

Spending Is the Story

Investors focused on capital expenditure. In the second quarter Meta spent $31.1 billion on capex, which left only $784 million of free cash flow. Analysts had expected third-quarter capex near $41 billion, up 117% from a year earlier, according to Investing.com. Estimates for 2027 capex ranged from roughly $193 billion to $205 billion before the report, so any hint on next year’s budget was likely to move the stock more than the quarter itself.

The cost of that spending shows in margins. Meta’s operating margin fell to 31% in the second quarter from 43% a year earlier, according to Investing.com, which is why investors scrutinize each capex update.

Meta narrowed its range for full-year data-center spending. Previous guidance was for $130 billion to $145 billion. Some commentary described the change as a raise, others as a narrowing, and what matters to investors is the signal that spending continues at a very high level.

A New Share Class

Meta announced plans to create a new class of non-voting stock to raise capital for its AI ambitions, along with a 2-for-1 stock split that gives Class A shareholders one non-voting Class C share for each share they hold. That keeps voting control with existing holders while opening a route to fund AI infrastructure through equity.

A Split Verdict on AI Spending

The reaction contrasted with Tesla, which cut its capital spending plans and fell. Commentators noted that this was the first time this season that two spending philosophies produced such a visible split on the same day. Meta is raising its outlay, and investors accepted it, though less enthusiastically than the revenue growth would suggest.

The backdrop is a risk-off market. S&P 500 futures fell 0.9% and Nasdaq 100 futures lost 1.6% as oil rose on the Middle East conflict and the AI selloff continued. Brent crude rose toward $112 a barrel, and the Federal Reserve is widely expected to hold rates at its Oct. 27-28 meeting while markets price a December hike.

What to Watch

Investors will look at the 2027 capex outlook on the earnings call, the pace of AI revenue and advertising growth, free cash flow after another quarter of heavy spending, and any further detail on how the non-voting shares will be used. The legal charge also bears on the cash outlook.

Disclaimer: This content is for informational purposes only and does not constitute financial advice or a recommendation to buy, sell, or hold any security, currency or commodity. Prices, probabilities and estimates are from third-party sources, change quickly and may differ by provider. Investors should conduct their own research and consult a licensed financial adviser before making investment decisions.