Meta’s AI commitments surge to US$825 billion, testing financing power

Meta Platforms (META) reported a 26% revenue increase to $64.6B, beating estimates, but its stock fell 7% due to AI spending concerns. CEO Mark Zuckerberg expects Muse AI's costs to improve by 10x within a year. Analysts raised targets, with a consensus mid-price target of ~$1,137, implying a 77% potential return.

Meta Platforms' board considered resigning over a dispute with CEO Mark Zuckerberg about a stock-heavy pay package and a new class of stock. The conflict involved Zuckerberg's control over voting power and board concerns for outside shareholders. Meta reported negative free cash flow of $2.12 billion in Q3 2026. The issue was resolved with a compromise that allows Zuckerberg to sell shares without losing voting power, but investor concerns about AI spending and cash flow remain.

Meta Platforms plans to create a new class of non-voting shares (Class C) by January 2027, using them for capital raising, employee compensation, and acquisitions. The shares will trade at a discount, causing dilution, and may limit tax-deferred deals. Meta's Q3 capex was $34.91 billion, with negative free cash flow of $2.12 billion. CEO Mark Zuckerberg retains voting control.

Meta reported a negative free cash flow of $2.12 billion in Q3, with capital expenditures at $34.91 billion exceeding operating cash flow of $32.79 billion. Revenue rose 26% YoY to $64.60 billion. The company forecasted 2026 capital spending of $135B-$145B and plans to issue non-voting Class C shares in 2027, potentially diluting shareholders. AI investments are driving costs but also enhancing advertising efficiency.

Meta Platforms (META) announced a stock split alongside its Q3 results. Revenue rose 26% YoY to $64.6B, while operating income fell 37% YoY to $13B due to a $9.89B legal charge. EPS increased 265% YoY to $3.83. The company plans to issue Class C non-voting shares to fund AI initiatives, including its Muse AI agent, which has seen strong adoption.

Google and Meta updated their data usage policies in October 2026, potentially exposing them to EU fines of up to 10% of global sales. Google's changes allow ad personalization using data from connected services like Gmail and Photos, while Meta's terms permit crawling business websites. Both companies reported negative free cash flow in 2026 due to AI spending, but no regulators have opened cases yet.