Meta shares jumped 2.5% in extended trading Wednesday after the Facebook parent beat Wall Street’s third-quarter revenue expectations, bringing in $64.60 billion against forecasts of $63.37 billion.
While Meta’s revenues surged by 26%, its operating income was negatively affected, giving investors an ambiguous perspective on the firm’s financial health.
Earnings came to $3.83 per share, though it is still unclear if that figure can be compared with analysts’ $5.75 expectation.
Meta expects more revenue as AI investments keep growing
The company expects fourth-quarter revenue of $73 billion to $76 billion, with the middle of that range sitting at $74.5 billion. Wall Street had penciled in $73.73 billion, based on LSEG estimates.
Meta has made changes to its estimated annual investment, which now stands at $135 billion to $145 billion compared to the previous figure of $130 billion to $145 billion. The analysts had predicted that the spending was around $138.27 billion.
The concentration on this part is primarily towards the data centers and other devices used to train the system and AI assistants.
The investors have to try and find out how much extra capacity Meta needs to gain profits out of these endeavors.
Audience growth was slightly disappointing, as daily active users on Meta’s apps reached 3.64 billion compared to StreetAccount’s expectations of 3.65 billion.
The above figure takes into account the numbers of users from Facebook, Instagram, and Meta’s range of social platforms.
September’s release of Muse, Meta’s personal AI assistant, helped the stock record its strongest September performance since 2022.
The software can handle tasks such as sorting through emails, searching online and identifying deals on products.
None of those abilities are particularly new, but Meta can introduce them to an audience numbering in the billions.
Mark Zuckerberg, the CEO, also hailed the launch of the Muse Wonder, which is another model that was launched last Monday by the company.
“We hit major milestones this quarter toward delivering personal superintelligence for everyone – including launching Muse and Muse Wonder, our first frontier model,” Zuckerberg said.
Zuckerberg faces California tax uncertainty while expanding Muse into businesses
Beyond consumer products, Meta wants developers and companies paying to use its AI technology.
For now, the plan includes making proprietary foundation models and Muse Code available for purchase.
Zuckerberg hopes in the end to create “an entire network of business Muse agents” for small businesses.
This way, various automated assistants would be able to collaborate on commercial operations rather than acting as separate consumer products. The longer-term ambition involves “making a version of Muse that people can bring into different corporate environments and work there,” Zuckerberg explained.
Meanwhile, a separate issue involving California’s proposed Proposition 40 wealth tax has complicated the billionaire’s personal arrangements.
A regulatory filing disclosed that Zuckerberg might relocate if voters approve the measure, potentially exposing him to an enormous tax obligation tied to his shareholdings.
He “could become liable for a significant, multi-billion-dollar tax payment based on his ownership of stock in the Company,” the filing said.
In response, Meta made a stock-based compensation offer to its founder in order to entice him to stay where the company is located.
Under that agreement, Zuckerberg committed to living in California, or another jurisdiction containing Meta’s headquarters, for eight years.
Exceptions are allowed in cases where any unforeseen major changes would make relocation to another place sensible.
According to the documents filed, such an exception would fall under the category of “unforeseen circumstances.”
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