Meta projects higher expenses for 2026, sending shares plummeting

Meta's stock slid in after-hours trading on Wednesday after the tech giant posted strong third-quarter results but warned that its expenses will be significantly higher in 2026 than this year.

Like its rivals, Meta Platforms Inc. has been on an artificial intelligence spending spree and said its costs will grow much faster next year, driven by infrastructure costs and employee compensation as it has hired AI experts at eye-popping compensation levels.

“Employee compensation costs will be the second largest contributor to growth, as we recognise a full year of compensation for employees hired throughout 2025, particularly AI talent, and add technical talent in priority areas,” Meta said.

Menlo Park, California-based Meta Platforms Inc. earned $2.71 billion (€2.33bn), or $1.05 per share, in the July-September period. Excluding tax-related special expenses, the company would have earned $7.25. Revenue rose 26% to $51.42bn (€44.29bn) from $40.59bn (€34.96bn).

Analysts, on average, were expecting earnings of $6.72 per share on revenue of $49.51bn (€42.64bn), according to analysts surveyed by FactSet Research.

Meta’s daily active user base on its apps — Facebook, Messenger, WhatsApp, Instagram and Threads — was 3.54 billion on average for September, up 8% year-over-year.

For the current quarter, Meta is forecasting revenue in the range of $56bn to $59bn (€48.23bn to €50.81). Analysts are forecasting $57.36bn for the October-December quarter.

Analysts remain optimistic

Despite the stock drop, analysts were less concerned about Meta's spending spree than shareholders appeared to be.

“For Meta, advertising is the foundation; AI is the growth engine,” said Debra Aho Williamson, founder and chief analyst at Sonata Insights.

“There’s a lot of focus on Meta’s capital expenditures related to AI, which is completely warranted. The spending is absolutely massive. But with 26% growth in revenue in Q3, it’s clear that what Meta is doing to integrate AI into its ad products is working.”

Meta did not say what it expects 2026 expenses to be, but analysts are forecasting $97bn (€83.51bn) — according to FactSet.

For this year, the company expects capital expenditures in the range of $70bn to $72bn (€60.28bn to €62bn), up from its previous outlook of $66bn to $72bn (€56.82bn to €62bn).

Andrew Rocco, stock strategist at Zacks Investment Research, said: “The quarter was not terrible, and forward statements continue to be positive. Most importantly, management confirmed that they expect ad revenue to remain strong.”

Meta also cautioned that it is facing a slew of legal and regulatory issues in the US and the European Union that could hurt its bottom line.

“In the US, a number of youth-related trials are scheduled for 2026, and may ultimately result in a material loss,” the company said.

In the US, Meta is facing an antitrust case that’s now awaiting a judge’s decision and could force the company to break off WhatsApp and Instagram, start-ups Meta bought more than a decade ago that have since grown into social media powerhouses.

Meta's shares fell more than 7% in after-hours trading.