Meta shares jump 5% as AI investments fuel revenue growth
Meta Platforms said Wednesday that its third-quarter profit jumped more than threefold, as the social media giant's revenue climbed sharply, adding to confidence that the firm's AI spending is improving the business.
Meta's shares experienced a 5% increase in after-hours trading on Wednesday, driven by strong growth and successful AI investments. The company reported a 26% increase in total revenue to $64.6 billion, attributed to AI recommendations, more ads being shown, and rising ad prices. CEO Mark Zuckerberg revealed that Meta's AI-powered Muse agent, launched in September, has the potential to generate more revenue per user than popular platforms like Instagram and Facebook.
With over 10 million US and Canadian users, Muse offers subscriptions, ads, e-commerce tools, and other features. The company aims to scale Muse to one billion users globally and achieve profitability faster than usual. Zuckerberg mentioned that while Muse demands significant computing power, Meta expects to improve cost efficiency by over 10 times within a year, enabling profitability once revenue lines are scaled.
Meta's net income for the July-September quarter reached $9.86 billion, up from $2.71 billion a year earlier, boosting earnings per share to $3.83. However, the firm's quarterly free cash flow turned negative for the first time since 2012 due to heavy spending on AI development. Meta now anticipates capital expenditures ranging from $135 billion to $145 billion for 2026, up from the previous estimate of $130 billion to $145 billion.
Despite facing legal and regulatory challenges, including a $25 billion judgment from New Mexico over data privacy violations related to the Cambridge Analytica scandal, Meta's core business remains strong, with promising prospects for future growth through Muse.
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