Meta Stock Falls 7% Despite Beating Earnings — The $135 Billion AI Bill Scared Wall Street

Meta Platforms reported third-quarter revenue of $64.6 billion, up 26% from a year earlier and ahead of Wall Street expectations — yet its stock sank nearly 7% on Thursday. The reason was not the past quarter. It was the price tag of the future: Meta raised its capital-spending plans for AI to between $135 billion and $145 billion, and a one-time legal charge of nearly $10 billion crushed reported profit.

Key Facts

• Q3 revenue: $64.6 billion, up 26% year over year — above estimates
• Reported EPS: $3.83 vs $6.54 expected — hit by a ~$10 billion multistate legal settlement charge
• Without the charge, EPS would have been about $7.40
• Full-year capex guidance raised: lower end lifted to $135 billion, range now $135–145 billion
• Stock reaction: down nearly 7% — one of the worst fallers in the S&P 500

Why did Meta stock fall if earnings beat?

Because investors are no longer paying for growth alone — they are asking what the growth costs. Meta's AI spending is now growing faster than its sales, and every guidance raise pushes the payoff further into the future. The earnings "miss" was accounting, not operations: a near-$10 billion charge tied to the U.S. teen social-media addiction settlements wiped out reported profit, even though the underlying business performed strongly.

What does the spending spree mean for the AI trade?

Meta is the clearest test case of the AI arms race. Its data-center bill supports an entire supply chain — Nvidia, Broadcom, and the chip sector that fell 6.7% on Thursday. If Meta ever signals discipline, suppliers shudder; when it spends more, investors question Meta's own margins. Thursday showed both fears at once: Meta fell on its bill, and chip stocks fell on doubts the bill will keep growing.

What should investors watch?

Whether advertising revenue — still Meta's engine — keeps growing near 26%, and whether management can show real returns from AI products in the next two quarters. Until AI spending visibly turns into AI profit, every earnings beat may keep getting sold.

FAQ

Did Meta actually miss earnings?
On reported numbers, yes — $3.83 vs $6.54 expected. Excluding the one-time legal charge, earnings of about $7.40 a share would have beaten expectations comfortably.

How big is Meta's AI budget now?
Capital spending guidance stands at $135–145 billion for the year — among the largest corporate investment programs in history.