TLDR
- Meta (META) stock fell 7% on Thursday, giving back its 7% after-hours gain from Wednesday’s earnings report.
- Q3 revenue rose 26% to $64.6 billion, and Muse signed up more than 10 million users in the U.S. and Canada.
- Free cash flow turned negative, and Meta raised its 2026 capital spending forecast to $135 billion to $145 billion.
- Meta said it is adding a new class of nonvoting shares to widen its funding options.
- Microsoft, Alphabet and Amazon report earnings next week.
Meta Platforms (META) stock fell 7% on Thursday, wiping out the 7% jump it posted in after-hours trading after Wednesday’s earnings report. The average one-year analyst target rose from $819 to $838 following the results, according to Bloomberg data. That target implies a gain of about 20% from Wednesday’s close.
The report itself was strong. Third-quarter revenue grew 26% from a year earlier to $64.6 billion. Advertising brought in $63.06 billion of that total.
Meta also gave a fourth-quarter revenue forecast of $73 billion to $76 billion. Results were noisy because of legal expenses, but growth was solid.
The headline from the call was Muse, Meta’s personal AI agent. More than 10 million people in the U.S. and Canada set up Muse agents in the six weeks since launch. Muse debuted with Muse Spark in April 2026.
Then the mood shifted. Early in the call, Meta said it is adding a new class of nonvoting shares. Goldman Sachs analyst Eric Sheridan asked for the reason.
CFO Susan Li said the move “will expand our funding tools and give us flexibility to invest behind the unprecedented momentum we’re seeing across every part of our business driven by AI.” A company filing went further. It pointed to recent large capital raises at Alphabet, SpaceX, Anthropic and OpenAI, which it said have made raising money harder.
The Cost Side of Muse
Spending is the sore spot. Meta reported $34.91 billion in capital expenditures for the quarter, including principal payments on finance leases. It also lifted its full-year capital spending forecast to between $135 billion and $145 billion.
Free cash flow turned negative in the quarter. Li said Muse’s compute needs mean growing its user base “will require significant investment.” Fast growth, in other words, comes with a big bill.
BREAKING 🚨: Meta$META posted negative free cash flow for the first time in history 👀 pic.twitter.com/p5PZcqEjuv
— Barchart (@Barchart) October 24, 2026
Credit markets noticed. The cost of insurance on Meta’s bonds rose to record highs. That is a sign some investors are worried about credit.
Nvidia CEO Jensen Huang spoke to CNBC on Thursday about the funding picture. He said demand for capital is much greater than the supply, and that “that’s going to get solved.” Not everyone found that comforting.
Outside Meta, the picture on AI returns is mixed. A KPMG survey found 89% of businesses report measurable value from AI. Only 12% consistently check whether those investments are profitable.
The share of companies reporting productivity gains from AI fell from 42% in the first quarter to 37% in the third quarter. Anthropic and OpenAI are growing quickly in users and revenue, but both are losing billions of dollars.
Market Reaction
The wider market took the news in stride. On Thursday, the Nasdaq Composite was down 0.5% for the week. The S&P 500 was little changed, and the Dow Jones Industrial Average was up 1.7%.
Bonds rallied hard. The 10-year Treasury yield fell 0.193 percentage point on Thursday, its biggest one-day drop in more than three years. Alphabet fell about 1% on the day as well.
Meta says Muse can reach users through Facebook, Instagram, WhatsApp, Messenger and Meta AI. That gives it a ready audience. Whether those users keep coming back, and at what cost, is the open question.
Microsoft, Alphabet and Amazon all report earnings next week. Investors will be watching what each says about AI spending.
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