Meta Reports Record Q3 Revenue, Raises Lower End of 2026 AI Capex Guidance
Meta announced its third-quarter 2026 results on October 21. Revenue reached $64.6 billion, up 26% year over year and above the analyst consensus of $63.3 billion, setting a new record. The company guided fourth-quarter revenue to $73 billion to $76 billion, with the midpoint above market expectations.
Profit was significantly affected by a one-time legal settlement charge. Meta recorded a $9.89 billion legal settlement expense, bringing diluted earnings per share to $3.83, below analyst estimates. Excluding the charge, EPS was $7.40. Net income for the quarter was $9.86 billion. Total costs and expenses rose 68% year over year, and operating margin fell to 20% from 40% a year earlier. Free cash flow turned negative for the first time since going public, at -$2.2 billion, though better than the -$9.4 billion analysts had expected.
Meta raised the lower end of its 2026 capital expenditure guidance to $135 billion, from $130 billion previously, while keeping the upper end at $145 billion. Capital expenditure in the third quarter, including finance lease principal payments, reached $34.91 billion. The company said it is investing tens of billions of dollars in chips and data centers to support its AI infrastructure expansion and compete with OpenAI and Anthropic.
Meta also announced the creation of a new class of non-voting Class C common stock, effective January 2027, to provide additional funding for its AI investments while preserving CEO Mark Zuckerberg's voting control. The new shares will be issued as a stock dividend, with each existing share receiving one new share.
Advertising remains the main growth driver. Ad impressions rose 10% year over year in the third quarter, and average ad price increased 14%. Family daily active people reached 3.64 billion, up 3%. Meta is applying AI to ad delivery and targeting, while advancing its AI assistant Muse and related business initiatives. The company expects full-year 2026 total expenses of $175 billion to $179 billion.
