Meta Stock Falls 7% After Q3 Report Reveals $825 Billion in AI Spending Commitments
Meta shares dropped more than 7% on Thursday after the company's third-quarter earnings report revealed roughly $825 billion in future AI spending commitments and a new nonvoting share class, even as revenue beat expectations.
Shares of Meta Platforms fell more than 7% on Thursday after the company’s third-quarter earnings report showed the scale of its artificial intelligence buildout: roughly $825 billion in future spending commitments for data centers, energy infrastructure and computing capacity.
The commitments, disclosed in a regulatory filing first reported by Bloomberg, rose from nearly $700 billion in July. They include about $355.7 billion in leases that have not yet started and $454.5 billion in non-cancelable contracts, with $121.4 billion due in 2027 alone.
Third-quarter capital spending reached $34.91 billion, pushing free cash flow to negative $2.12 billion. That was the first quarter of negative free cash flow since Meta went public in 2012. Meta narrowed its 2026 capital expenditure guidance to $135 billion to $145 billion, and Chief Financial Officer Susan Li signaled on the earnings call that the company would continue investing aggressively into 2027 to support its compute-intensive Muse AI agent network.
Revenue beat was not enough
The spending overshadowed results that beat expectations. Revenue grew 26% to $64.6 billion, and fourth-quarter sales guidance of $73 billion to $76 billion topped the consensus estimate. Earnings per share came in at $3.83 under generally accepted accounting principles, pulled down by a $9.89 billion charge tied to youth litigation. Without that charge, earnings would have been $7.40 per share.
Meta also raised its full-year expense guidance to $175 billion to $179 billion and announced a new non-voting Class C share class to help finance its long-term infrastructure needs.
“Investors are concerned about Meta’s capital needs next year,” D.A. Davidson analyst Gil Luria told Investor’s Business Daily. “An ‘aggressive’ year of investment means more debt raising and the new nonvoting share class means also more equity issuance.”
Shares of Amazon, Microsoft and Alphabet, Meta’s fellow cloud giants, also fell on Thursday as the spending worries spread to the rest of the AI trade.
Reporting based on coverage by Investor’s Business Daily and TradingView/StockStory, citing Bloomberg.
