TLDR
- Meta’s stock fell after Q3 earnings despite strong revenue growth of 26% year-over-year to $51.2 billion
- The company plans to spend $70-72 billion on capital expenditures in 2025, up from $39.2 billion in 2024
- Capital spending will increase even more in 2026, likely crossing $100 billion for AI infrastructure investments
- CEO Mark Zuckerberg stated the company isn’t worried about overbuilding its AI capacity
- Free cash flow dropped to $10.6 billion from $15.5 billion in the prior year quarter due to increased spending
Meta Platforms delivered strong third-quarter results that exceeded expectations. Revenue climbed 26% to $51.2 billion, beating the company’s own guidance of $48.75 billion.
The advertising business showed strength across multiple metrics. Ad impressions rose 14% year-over-year while the average price per ad increased 10%.
Daily active users grew 8% compared to the same period last year. Meta’s AI recommendations drove 5% more time spent on Facebook and 10% more on Threads.
Despite these positive numbers, investors sent the stock tumbling. The selloff erased all of Meta’s 30% gains from earlier in 2025, leaving the stock up just 7% for the year.
The market’s concern centers on Meta’s aggressive spending plans. The company expects to spend between $70 billion and $72 billion on capital expenditures in 2025.
That represents a massive jump from last year’s $39.2 billion. But 2026 looks even more intense.
Spending Plans Raise Eyebrows
CFO Susan Li warned that capital expenditure dollar growth will be “notably larger” in 2026 than in 2025. If spending increases by a similar amount, Meta’s total could easily exceed $100 billion next year.
The money goes toward building AI computing infrastructure. Meta believes these investments will improve ad conversion rates and streamline business operations.
Early results show promise, but the payoff remains uncertain. Zuckerberg told investors the company isn’t worried about overbuilding capacity.
That statement didn’t reassure Wall Street. Investors worry Meta might repeat its metaverse mistakes, when billions of dollars failed to generate meaningful returns.
Cash Flow Takes a Hit
The spending spree is already affecting Meta’s financials. Free cash flow dropped to $10.6 billion in Q3, down from $15.5 billion a year earlier.
Meta now spends more of its cash flow on capital projects than ever before. The company may need to take on debt to finance its AI ambitions.
Management guided for 19% revenue growth in Q4 at the midpoint. That’s solid performance but represents a slowdown from Q3’s pace.
Total expenses for 2025 should land between $116 billion and $118 billion. Next year’s expense growth rate will accelerate even faster, according to company guidance.
The stock trades at lower valuations after the recent drop. Shares currently sit at $606.63, well below the 52-week high of $796.25.
Ad impressions and pricing both grew in double digits during Q3. The core business remains healthy even as spending increases.
Meta expects infrastructure investment to drive the bulk of next year’s capital expenditure growth. The company is betting big on AI to maintain its competitive edge in social media and advertising.
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