SILICON VALLEY — Meta, the operator of Facebook and Instagram, raised the lower end of its annual capital spending forecast, signaling its intent to expand artificial intelligence investment. The move follows a surge of confidence in its AI business after the September launch of its AI agent, Muse. Meta will issue new non-voting shares to raise the funds needed for the AI expansion.
Meta said in a regulatory filing on the 21st that third-quarter revenue rose 26% from a year earlier to $64.6 billion. That topped the $63.4 billion consensus estimate compiled by the London Stock Exchange Group. Earnings per share, however, came in at $3.83, below the $5.75 analysts had expected.
Muse drove the revenue gain. Meta has linked the agent to its social media services, including Facebook, Instagram and Threads, opening an era of mainstream AI agents. Chief Executive Mark Zuckerberg said he expects revenue per Muse user to exceed the several hundred dollars a year that Meta's existing apps, including Facebook and Instagram, currently generate. He said a substantial share of that revenue would come from businesses, suggesting a broad push into commerce. Zuckerberg said he expects to generate long-term fee income through transaction commissions, but did not disclose specific plans for charging fees.
Meta forecast that fourth-quarter revenue would exceed the third quarter's. The company said it expects revenue of $73 billion to $76 billion for the period. The midpoint of that range is above the $73.73 billion analysts had projected, indicating Meta expects to keep beating market expectations.
Meta revised its annual capital expenditure range to between $135 billion and $145 billion, lifting the lower end from the $130 billion it had previously guided. The change reflects greater-than-expected spending on data center computing infrastructure. As a result, Meta's free cash flow — the cash left after expenses are paid — deteriorated, turning negative at $2.12 billion in the third quarter. The figure was $784 million in the previous quarter and $10.63 billion a year earlier. "Our investments are paying off, our core business is strong, and we are seeing growth across the board," Zuckerberg said.
Despite the cash flow squeeze from its heavy AI spending, Meta stressed that it would keep investing by issuing stock. The company plans to issue new non-voting Class C common shares in January 2027, in a move expected to amount effectively to a two-for-one stock split. "The goal is to fund growth and support our ability to maintain our leading position amid fierce competition at home and abroad," Meta said. "Issuing Class C common stock will help sustain the founder-led model that has driven the company's success since its founding."
Investors welcomed signs that Muse's popularity was translating into earnings. Meta shares rose 0.47% in regular trading, then jumped more than 6% after the results were released, before paring the gain to 3.67% as of 5:14 p.m. Eastern time.
