Meta shares jumped 2.5% in extended trading on Wednesday after the Facebook parent beat Wall Street's third-quarter revenue expectations, bringing in $64.60 billion against forecasts of $63.37 billion, according to the company's official earnings release.

While revenue surged by 26%, operating income took a hit, giving investors an ambiguous perspective on the firm's financial health. Earnings came to $3.83 per share, though it remains unclear whether that figure can be compared directly with analysts' $5.75 expectation. The gap between accelerating revenue and softer operating profit frames the question hanging over the results: whether Meta's AI spending can generate returns as quickly as it is expanding.

Meta expects more revenue as AI investments keep growing

The company expects fourth-quarter revenue of $73 billion to $76 billion, with the middle of that range sitting at $74.5 billion. Wall Street had penciled in $73.73 billion, based on LSEG estimates. The mid-point sits well above the $64.60 billion recorded this quarter, pointing to continued top-line growth into the final stretch of the year.

Meta also revised its estimated annual investment, which now stands at $135 billion to $145 billion, up from the previous figure of $130 billion to $145 billion. Analysts had predicted spending of around $138.27 billion. The change lifts the floor of that range by $5 billion while leaving the ceiling untouched, and it arrives amid a broader race among major technology companies to lock in the computing power behind modern AI systems. The focus of this spending is on data centers and other devices used to train the company's systems and AI assistants. Investors must now try to work out how much extra capacity Meta needs to generate profits from these endeavors.

Audience growth was slightly disappointing, as daily active users across Meta's apps reached 3.64 billion, compared with StreetAccount's expectations of 3.65 billion. That figure takes into account users of Facebook, Instagram, and Meta's range of social platforms. Even small movements in that number draw scrutiny, since user reach underpins the advertising business that funds Meta's broader AI ambitions.

September's release of Muse, Meta's personal AI assistant, helped the stock record its strongest September performance since 2022. The software can handle tasks such as sorting through emails, searching online, and identifying deals on products. None of those abilities are particularly new, but Meta can introduce them to an audience numbering in the billions.

Chief Executive Mark Zuckerberg also hailed the launch of Muse Wonder, another model unveiled by the company last Monday. "We hit major milestones this quarter toward delivering personal superintelligence for everyone – including launching Muse and Muse Wonder, our first frontier model," Zuckerberg said.

Zuckerberg faces California tax uncertainty while expanding Muse into businesses

Beyond consumer products, Meta wants developers and companies to pay to use its AI technology. For now, the plan includes making proprietary foundation models and Muse Code available for purchase. Zuckerberg hopes in the end to create "an entire network of business Muse agents" for small businesses, an arrangement in which various automated assistants would be able to collaborate on commercial operations rather than acting as separate consumer products. The longer-term ambition involves "making a version of Muse that people can bring into different corporate environments and work there," Zuckerberg explained. The effort is a test of whether the reach behind Meta's consumer apps can be converted into revenue from paying business customers.

Meanwhile, a separate issue involving California's proposed Proposition 40 wealth tax has complicated the billionaire's personal arrangements. A regulatory filing disclosed that Zuckerberg might relocate if voters approve the measure, potentially exposing him to an enormous tax obligation tied to his shareholdings. He "could become liable for a significant, multi-billion-dollar tax payment based on his ownership of stock in the Company," the filing said.

In response, Meta made a stock-based compensation offer to its founder in order to entice him to stay where the company is located. Under that agreement, Zuckerberg committed to living in California, or another jurisdiction containing Meta's headquarters, for eight years. Exceptions are allowed in cases where unforeseen major changes would make relocation sensible; according to the documents filed, such an exception would fall under the category of "unforeseen circumstances." How California voters ultimately weigh Proposition 40 will determine whether any of these provisions are ever put to use.