Meta Beat Expectations. Now Comes the Hard Part: Does the AI Spending Pay Off?
Meta Platforms, the company behind Facebook, Instagram, and WhatsApp, reported revenue of $64.60 billion for the third quarter of 2026 on Wednesday, October 21, after the US stock market closed, according to the company's press release. Its earnings were $3.83 per share, meaning profit divided by the number of shares outstanding.
Revenue came in above the $61 billion to $64 billion range Meta had forecast in its July report. Analysts had expected $63.3 billion in revenue and $3.56 per share, according to Bloomberg estimates that Yahoo Finance reported. That works out to revenue about 2.1 percent higher than expected and earnings about 7.6 percent higher.
Comparing with the previous quarter tells a messier story. Revenue rose from $60.80 billion, a gain of roughly 6.3 percent. Earnings per share fell from $6.18, a drop of about 38 percent.
Part of that swing is accounting. Meta's first-quarter report mentions an $8.03 billion charge recorded in the third quarter of 2025. That charge distorts any comparison with that period, so revenue is the cleaner number to follow.
The bigger debate is about spending. In January, Bloomberg reported that better online advertising was making it possible for Meta to spend hundreds of billions of dollars on AI over the next few years. A Reuters Breakingviews column dated October 21 projected negative free cash flow of $8.5 billion for the third quarter, based on compiled estimates.
Free cash flow is the money a company has left after running its business and paying for big purchases, such as data centers. Think of it as what remains of a paycheck after the essential bills are paid. Negative means the company spent more cash than it brought in, so it had to draw on savings or borrowing to cover the gap.
Muse is the AI product at the center of the story. In April, Meta launched Muse Spark, which it called its most powerful model yet. In July, the company said its Meta AI assistant could make plans, connect to email and calendars, and handle tasks for users. In September, Meta introduced Muse as a personal AI agent, meaning software that takes actions for you rather than only answering questions. On September 29, it posted about Muse for small businesses.
The key question is whether these features bring in more users and advertising money quickly enough to pay for all that spending. Reuters reporting suggests investors were asking exactly that before the results came out.
Meta also announced a quarterly cash dividend, a regular payment to shareholders, on September 10, 2026.
In my view, that dividend mainly shows Meta is keeping its payments steady while it spends heavily on AI. It says little about whether the spending will pay off.
In July, Meta shares fell after the company defended its AI bets and gave a revenue forecast that disappointed, Bloomberg reported. An October 21 Bloomberg opinion column framed this report around investors looking to Mark Zuckerberg for a payoff from Muse.
That is the right lens. Beating expectations shows revenue is running ahead of forecasts. It does not show whether the spending is earning its keep.
In my view, three numbers matter most: revenue compared with the forecast, cash generated compared with money spent, and what the company says about costs on its call. Profit per share is the least reliable of the three, because one-off items and tax swings can distort it. The $3.83 is a real result, but one quarter will not settle whether Meta is entering a stronger phase or just having a good one in a costly cycle.
