Meta third quarter profit Investors did not like the report.
Meta shares fell nearly 9% in after-hours trading Wednesday on an investor call.
Meta beat Wall Street estimates with reported revenue of $51.24 billion. However, a $15.9 billion tax bill, earnings per share that missed expectations and some concerns about whether Meta's huge investment in artificial intelligence will lead to profit, weighing down the company's shares.
From Meta's rising capital expenditures to what makes the company profitable, here are the key takeaways from the social media giant's call with analysts.
1. Cost of “new features”
Meta CEO Mark Zuckerberg and financial director Susan Lee spent much of the conversation discussing the company's growing spending on artificial intelligence infrastructure.
Meta now expects to spend between $70 billion and $72 billion on infrastructure this year, and also expects spending growth in 2026 to be “noticeably higher” than in 2025 as AI workloads continue to grow.
Lee said during the call that Meta plans to “invest aggressively” in both its own data centers and third-party cloud capacity, with infrastructure costs putting “upward pressure” on capital spending.
“In the worst case scenario,” Zuckerberg said, Meta would simply “pre-build the system for a couple of years,” absorbing the additional costs through depreciation while it grew to additional capacity. The big danger, he says, is “underinvestment” in computer technology.
“We're really trying to create new opportunities,” Zuckerberg said. “It’s not like a check-the-box exercise.”
Employee salaries also climbs. Lee said compensation will be the second-largest driver of cost growth in 2026, reflecting employee salaries for the full year. artificial intelligence specialists hired in 2025, as well as new technicians in “priority areas.”
Similar stories
Business Insider covers the innovation stories you want to know
Business Insider covers the innovation stories you want to know
“Computer data and talent are what we rely on the most,” Lee said. “This is what will drive Meta's advantage in artificial intelligence.”
2. Problems of the Reality Laboratory
Meta Reality Labs is still bleeding billions, although losses have narrowed slightly from the previous quarter.
The division, which houses Meta's virtual reality hardware, artificial intelligence devices and metaverse initiatives, reported revenue of $470 million and an operating loss of $4.43 billion for the quarter, compared with a loss of $4.53 billion in the second quarter.
Lee said Reality Labs' revenue received a temporary boost as retailers stocked up on Quest headsets ahead of the holiday season. But she acknowledged that Quest headsets are being hampered this year because Meta hasn't released a new model.
“We continue to expect strong growth in AI glasses revenue in the fourth quarter compared to last year as we benefit from strong demand for the latest products we introduced,” Lee said, “but this is more than offset by headwinds to Quest headsets.”
3. Solving the problem of tax charges
This quarter, Meta took on a huge one-time tax bill of $15.9 billion related to changes to President Donald Trump's One big beautiful bill lawwhich took place in July.
The company said the implementation of the new tax law allowed for a “valuation allowance on our U.S. federal deferred tax assets,” resulting in a one-time non-cash income tax expense.
Lee said that despite the huge costs, Meta expects the overall tax burden to decrease in the future. The company expects a “significant reduction” in federal tax payments due to provisions of the new legislation.
Without the one-time levy, Meta's effective tax rate would drop from 87% to 14%, Lee said. Lee said the adjustment “will allow us to benefit from a tax perspective” as Meta continues to make major investments in artificial intelligence infrastructure and data centers.
4. AI increases engagement
Zuckerberg said AI is delivering benefits in the company's core applications as well as in advertising.
Zuckerberg told investors that over the past year, AI-powered recommendation engines have increased time spent on Facebook by 5%, time spent on Threads by 10%, and video viewing on Instagram by more than 30%.
“As video continues to grow across our apps, Reels now exceeds $50 billion in annual revenue,” Zuckerberg said. “Improvements to our recommendation systems will also become even more desirable as volume increases. Content created by artificial intelligence is growing.”
Lee added that Meta's generative AI features for advertisers, including AI-generated music, are also “driving performance gains” and are expected to offset losses suffered by Reality Labs.
Whether the profits AI generates in these areas can offset Meta's planned capital expenditure remains to be seen.
5. Artificial intelligence glasses are a popular product
Ahead of the call, some analysts were skeptical about whether the hype around AI glasses would lead to sales. Forrester VP and Research Director Mike Proulx told Business Insider that while early adoption of Meta glasses will likely be driven by “tech-curious” consumers, demos could still be “way ahead of actual purchases.”
However, during the conversation, Zuckerberg said that the company Glasses with artificial intelligence could be a “very good investment” as sales of the new line soar.
During the call, Zuckerberg told analysts that Meta's collaborations with Ray-Ban and Oakley are “going very well” and that revenue will come not only from device sales, but also from services layered on top of them.
Zuckerberg said that the artificial intelligence capabilities built into the glasses will soon become “the main thing people use them for” and that the new Meta technology Ray-Ban displays sold out in “almost every store” within 48 hours, with demo appointments scheduled through the end of next month.
