Meta Platforms (META) stock fell 7% on Thursday, wiping out the 7% gain it had posted in after-hours trading following Wednesday's earnings report. The decline came despite strong headline results, as attention during the call shifted to the company's spending plans and funding strategy.

According to Bloomberg data, the average one-year analyst target rose from $819 to $838 following the results. That target implies a gain of about 20% from Wednesday's close. The gap between higher targets and a lower share price captures the split screen from the call: strong operating results on one side, rising spending and a new funding strategy on the other.

A Strong Quarter on the Top Line

Third-quarter revenue grew 26% from a year earlier to $64.6 billion, with advertising bringing in $63.06 billion of that total. Meta also issued a fourth-quarter revenue forecast of $73 billion to $76 billion. Results were noisy because of legal expenses, but the underlying growth was solid.

The headline from the call was Muse, Meta's personal AI agent. More than 10 million people in the U.S. and Canada set up Muse agents in the six weeks since launch. Muse debuted with Muse Spark in April 2026.

A New Class of Nonvoting Shares

The mood shifted early in the call, when Meta said it is adding a new class of nonvoting shares. Goldman Sachs analyst Eric Sheridan asked for the reason. CFO Susan Li said the move "will expand our funding tools and give us flexibility to invest behind the unprecedented momentum we're seeing across every part of our business driven by AI."

The structure matters for governance. Nonvoting shares let a company raise equity capital without giving buyers a vote in corporate decisions, so issuing new stock this way would not dilute the voting control that founder-CEO Mark Zuckerberg holds through his supervoting shares.

A company filing went further. It pointed to recent large capital raises at Alphabet, SpaceX, Anthropic and OpenAI, which it said have made raising money harder — a snapshot of how many large AI-linked companies are seeking capital at once.

The Cost Side of Muse

Spending is the sore spot. Meta reported $34.91 billion in capital expenditures for the quarter, including principal payments on finance leases. It also lifted its full-year capital spending forecast to between $135 billion and $145 billion.

Free cash flow turned negative in the quarter, according to the company's report — a milestone market data provider Barchart highlighted as a first in Meta's history. Free cash flow is what remains after a company covers operating costs and capital spending, so a negative figure means Meta spent more cash than it generated that quarter, covering the difference from borrowings or existing reserves.

BREAKING 🚨: Meta $META posted negative free cash flow for the first time in history 👀 pic.twitter.com/p5PZcqEjuv
— Barchart (@Barchart) October 24, 2026

Li said Muse's compute needs mean growing its user base "will require significant investment." Fast growth, in other words, comes with a big bill.

Credit markets noticed. The cost of insurance on Meta's bonds rose to record highs — a sign that some investors are worried about the company's credit.

Nvidia CEO Jensen Huang, whose company is the leading supplier of AI chips, spoke to CNBC on Thursday about the funding picture. He said demand for capital is much greater than the supply, and that "that's going to get solved." Not everyone found that comforting.

AI Returns Look Mixed Beyond Meta

Outside Meta, the picture on AI returns is mixed. A KPMG survey found 89% of businesses report measurable value from AI, but only 12% consistently check whether those investments are profitable. The share of companies reporting productivity gains from AI fell from 42% in the first quarter to 37% in the third quarter, a five-point decline. Anthropic and OpenAI are growing quickly in users and revenue, but both are losing billions of dollars.

Market Reaction

The wider market took the news in stride. On Thursday, the Nasdaq Composite was down 0.5% for the week, the&P 500 was little changed and the Dow Jones Industrial Average was up 1.7%. Bonds rallied hard: the 10-year Treasury yield fell 0.193 percentage point on Thursday, its biggest one-day drop in more than three years. Alphabet, which also reports next week, fell about 1% on the day as well.

Meta says Muse can reach users through Facebook, Instagram, WhatsApp, Messenger and Meta AI, giving the agent a ready audience across the company's apps. Whether those users keep coming back, and at what cost, is the open question.

Microsoft, Alphabet and Amazon all report earnings next week. Investors will be watching what each says about AI spending.

Source: CoinCentral