Meta beats earnings, raises capex guidance amid AI expansion
Meta reported strong Q3 revenue and launched its Muse AI agent, which has gained over 10 million users. The company raised its full-year capital expenditure guidance to $135 billion to $145 billion.
Meta reported Q3 revenue of $64.6 billion, up 26% year-over-year and exceeding expectations by over $1 billion. Earnings per share were $3.83, impacted by a $10 billion charge for legal settlements with US states regarding risks to children on Instagram and Facebook. The stock rose approximately 5% after hours. Meta set Q4 revenue guidance at $73 billion to $76 billion, also above analyst estimates.
The company's new AI assistant, Muse, has over 10 million users in the US and Canada within six weeks, with 25% using it daily. Over 25% of users spend more than $200 per shopping trip via Muse, with revenue primarily generated through subscriptions ranging from $20 to $100 per month. Bank of America expects Muse to consume significant compute resources with minimal revenue until the end of 2027. Meta raised its full-year capital expenditure guidance to $135 billion to $145 billion, resulting in negative free cash flow of $2.1 billion. Additionally, Meta will issue a new non-voting stock class in January, effectively a 2-for-1 split, to raise capital without diluting Mark Zuckerberg's control.