Shares of Meta Platforms fell sharply in after-hours trading on Wednesday after the social media giant reported strong third-quarter results but warned that its expenses would rise substantially in 2026 due to heavy spending on artificial intelligence and infrastructure.
The Menlo Park-based company posted revenue of $51.42 billion for the July to September quarter, a 26 percent increase from the same period last year. Growth was driven by strong advertising demand and steady user gains across Facebook, Instagram, WhatsApp, Messenger and Threads. Adjusted earnings stood at $7.25 per share, beating Wall Street expectations of about $6.72.
However, a large one-time tax expense of nearly $16 billion reduced reported profit to $2.71 billion, or $1.05 per share. The charge, linked to the repatriation of overseas earnings, dragged quarterly net income down by more than 80 percent. Despite the underlying strength in its operations, the stock slipped 7.7 percent to $694 in extended trading after closing at $751.67.
Meta said its total expenses are expected to increase sharply in 2026, led by large investments in AI infrastructure, data centers, and employee compensation. The company has been hiring artificial intelligence specialists and engineers at high pay levels, which will add to next year’s salary costs.
Infrastructure spending will be the largest contributor to the rise in expenses as Meta expands data centers, servers, and networking capacity to support its growing AI operations. Employee pay will be the second biggest factor, with the company recognizing a full year of compensation for technical staff hired in 2025.
For 2025, Meta expects total expenses of $114 billion to $118 billion, up more than 20 percent from this year. Capital expenditure is projected between $66 billion and $72 billion, with a similar level of investment likely in 2026.
Despite investor concerns about rising costs, Meta’s user base continued to expand. The company reported 3.54 billion daily active users across its family of apps in September, an 8 percent increase from a year earlier. Advertising remained its main source of income, boosted by stronger demand and improvements in ad-targeting through AI.
For the current quarter ending in December, Meta forecast revenue in the range of $56 billion to $59 billion, broadly in line with analyst estimates.
The sharp reaction in the market reflects investor unease over how quickly Meta’s costs are growing compared with its profit outlook. The company has said that its AI investments are already improving ad performance, but the full benefits of its large-scale infrastructure expansion may take time to appear.
Meta is also dealing with several legal and regulatory challenges. In the United States, it is awaiting a ruling in a major antitrust case that could potentially require it to separate WhatsApp and Instagram. The company also faces multiple lawsuits related to youth mental health, with trials scheduled for 2026. In Europe, tougher data protection rules continue to pressure its advertising business.
Market analysts believe Meta’s advertising business remains healthy and that its push into AI will strengthen long-term growth. However, they expect margins to stay under pressure in the near term as the company invests heavily in technology and talent to compete with Google, Amazon, and Microsoft in artificial intelligence.
For now, Meta’s challenge is to convince investors that its multibillion-dollar bet on AI will deliver higher growth and efficiency in the years ahead, even as near-term costs climb.
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