Meta’s earnings tumble after a US$15.9 billion tax charge from Trump’s “Big Beautiful Bill"
Meta Platforms Inc. is betting billions on artificial intelligence, a move that is reshaping both its financial outlook and the broader technology landscape.
According to Reuters, the company has raised its capital expenditure guidance for the year to between US$70bn and US$72bn, up from its previous outlook of US$66bn to US$72bn, as it aggressively builds out data centres and recruits top AI talent to pursue superintelligence.
Despite reporting a 26 percent year-over-year revenue increase to US$51.42bn in the third quarter, Meta’s stock experienced its largest one-day loss since October 2022, falling more than 11 percent in after-hours trading, as reported by CNBC.
Analysts and investors reacted to the company’s warning that expenses will rise significantly in 2026, driven by infrastructure investments and compensation for newly hired AI experts, according to The Canadian Press.
Meta’s third-quarter earnings per share fell sharply to US$1.05, 84 percent below economists’ projections, due to a one-time tax charge of US$15.93bn related to US President Donald Trump’s One Big Beautiful Bill Act, as reported by Forbes.
Without the tax charge, Meta said earnings per share would have been US$7.25.
CEO Mark Zuckerberg defended the spending surge, stating on an earnings call that Meta is “aggressively” preparing for the arrival of superintelligence, aiming to be “ideally positioned for a generational paradigm shift in many large opportunities,” as reported by Forbes.
Zuckerberg added that front-loading infrastructure investments would ensure Meta is ready for the most optimistic scenarios, and that any excess compute capacity could accelerate the company’s core business.
Meta’s AI push is not limited to infrastructure.
The company has reorganized its AI efforts under the new “Superintelligence Labs” unit and invested US$14.3bn in the AI startup Scale AI, bringing on its CEO, Alexandr Wang, to lead the initiative, as detailed by CNBC.
The company’s AI-optimized ad platform continues to drive business performance, helping marketers automate campaigns, improve video ad quality, and generate persona-based images for targeted segments, according to Reuters.
Meta’s daily active user base across its platforms reached 3.54 billion in September, up 8 percent year-over-year, as reported by The Canadian Press.
For the fourth quarter, Meta forecasts revenue between US$56bn and US$59bn.
While the company’s Reality Labs unit, responsible for VR and AI smart glasses, posted a US$4.4bn operating loss, it still surpassed Wall Street’s expectations for both loss and revenue, according to Forbes.
Meta’s strategy comes as other technology giants, including Alphabet and Microsoft, also signal higher capital expenditures for AI infrastructure.
Meta recently inked a six-year, US$10bn cloud deal with Google to further build out its AI infrastructure, as noted by Forbes.
As Meta’s AI investments accelerate, the company continues to face legal and regulatory challenges in the US and Europe, including youth-related trials and an antitrust case that could potentially force divestitures, as per The Canadian Press.
