Meta Stock Plummets 8% Despite Revenue Beat as AI Costs Weigh on Margins
Meta Platforms delivered mixed Q3 results that rattled investors, with shares tumbling 8% in after-hours trading. While revenue climbed 26% year-over-year to $51.2 billion, surpassing estimates, earnings cratered to $1.05 per share due to a massive $15.9 billion one-time charge.
The tech giant's aggressive AI investments are showing growing pains. Operating margins compressed to 40% from 43% as infrastructure costs outpace revenue growth. Meta now forecasts $71 billion in 2025 capital expenditures, with even heavier spending expected in 2026.
Free cash FLOW tells the troubling story - despite a 21% operational cash flow increase, overall FCF dropped 35% as AI ambitions drain resources. BofA Securities maintained its Buy rating but slashed Meta's price target by $90, citing looming pressure on earnings growth.
