Meta predicts higher spending for 2026, causing shares to fall significantly

2025-10-30 09:46:00, Tech CNA

Meta shares fell in after-hours trading after the tech giant posted strong third-quarter results but warned that its expenses will be significantly higher in 2026 than this year.

Like its rivals, Meta Platforms Inc. has been spending heavily on artificial intelligence and said its costs will grow much faster next year, driven by infrastructure costs and employee compensation, as it has hired AI experts at dizzying compensation levels.

"Employee compensation costs will be the second largest contributor to growth, as we recognize a full year of compensation for employees hired throughout 2025, especially artificial intelligence talent, and add technical talent in priority areas," Meta said.

Meta Platforms Inc., based in Menlo Park, California, earned $2.71 billion (2.33 billion euros), or $1.05 per share, in the July-September period. Excluding special tax-related charges, the company would have earned $7.25. Revenue rose 26% to $51.42 billion (44.29 billion euros) from $40.59 billion (34.96 billion euros).

Analysts, on average, expected earnings of $6.72 per share and revenue of $49.51 billion (42.64 billion euros), according to analysts surveyed by FactSet Research.

Meta's active user base across its apps — Facebook, Messenger, WhatsApp, Instagram and Threads — averaged 3.54 billion for September, up 8% from a year ago.

For the current quarter, Meta predicts revenue in the range of $56 billion to $59 billion (€48.23 billion to €50.81 billion). Analysts predict $57.36 billion for the October-December quarter.

Analysts remain optimistic

Despite the stock's decline, analysts were less concerned about Meta's excessive spending than shareholders seemed to be.

“For Meta, advertising is the foundation, artificial intelligence is the growth engine,” said Debra Aho Williamson, founder and principal analyst at Sonata Insights.

“There’s a lot of focus on Meta’s capital spending around artificial intelligence, which is completely justified. The spending is absolutely massive. But with a 26% increase in revenue in the third quarter, it’s clear that what Meta is doing to integrate artificial intelligence into its advertising products is working.”

Meta did not say what the spending he expects to be for 2026, but analysts predict $97 billion (83.51 billion euros) — according to FactSet.

For this year, the company expects capital expenditures in the range of $70 billion to $72 billion (€60.28 billion to €62 billion), down from its previous forecast of $66 billion to $72 billion (€56.82 billion to €62 billion).

Andrew Rocco, equity strategist at Zacks Investment Research, said: “The quarter wasn’t terrible and the forward-looking statements continue to be positive. Most importantly, management confirmed that they expect advertising revenue to remain strong.”/ CNA