AI spending pushes Meta’s FCF into negative territory – META stock forecast following Q3 results

Meta increased revenue by 26%, but massive investment in AI pushed FCF into negative territory for the first time since 2012. A new securities offering increases dilution risk, while the META stock forecast points to continued pressure on the share price.

Meta Platforms, Inc. (NASDAQ: META) reported mixed results for Q3 2026. Revenue rose 26% to 64.60 billion USD, supported by a strong advertising business. However, investors were concerned about rising spending on artificial intelligence. Capital expenditure reached 34.91 billion USD, while free cash flow turned negative. The higher investment forecast and plans to issue new shares heightened concerns about the company’s future profitability and triggered a sell-off in the stock.

For Q4 2026, Meta’s management forecasts revenue of 73–76 billion USD. Full-year 2026 capital expenditure is expected to reach 135–145 billion USD, with substantial investment in AI set to continue into 2027.

This article analyses Meta Platforms shares after the Q3 2026 report, examining the company’s main revenue sources, financial results, and the impact of rising AI investment. It also provides a fundamental analysis of META, analyst forecasts, and technical levels, which form the basis for a Meta Platforms stock forecast.

About Meta Platforms, Inc.

Meta Platforms, formerly known as Facebook, was founded in 2004 by Mark Zuckerberg and his Harvard classmates Eduardo Saverin, Andrew McCollum, Dustin Moskovitz, and Chris Hughes. It was initially a social network for Harvard students, but soon expanded to become one of the world’s largest communication platforms. Meta’s core operations include developing social networks such as Facebook, Instagram, and WhatsApp, as well as advancing virtual and augmented reality technologies through its Reality Labs division. The company puts a significant focus on developing the metaverse, as reflected in its 2021 rebranding. Meta went public on 18 May 2012, and its IPO ranked among the most prominent tech IPOs in history.

Meta Platforms, Inc.’s main financial flows

Meta Platforms’ revenue mainly comes from the following sources:

• Advertising: this segment accounts for approximately 98.5% of the company’s total revenue. Meta generates advertising revenue through its platforms (Facebook, Instagram, Messenger, and WhatsApp), allowing advertisers to target audiences based on various criteria, including demographic data, user interests, and behaviour.

• Reality Labs: this division generates a smaller portion of the company’s revenue through hardware sales under the Meta Quest (previously Oculus VR) brand and related software products, including content.

• Other revenue: this comprises fees for using Meta’s payment systems (for example, on Marketplace platforms or apps), paid subscriptions for special features or products, and income from other services. While these sources are less significant than advertising, they still contribute to the company’s financial performance.

Thus, Meta Platforms’ primary source of revenue is advertising on its social platforms, followed by income from virtual reality sales and services, as well as additional proceeds from other sources.

Meta Platforms, Inc. Q2 2024 financial results

Meta announced solid financial results for Q2 2024. Below are the figures compared with the same period in 2023:

• Revenue: 39.07 billion USD (+22%)
• Net income: 13.46 billion USD (+73%)
• Earnings per share: 5.16 USD (+73%)
• Operating margin: 38%​ (+900 basis points)
• Advertising revenue: 38.33 billion USD (+21%)
• Revenue from Reality Labs: 353 million USD (+27%)
• Loss from Reality Labs: 4.50 billion USD (+21%)
• Number of daily active users: 3.27 billion (+7%)
• Costs and expenses: 24.22 billion USD (+7%)

Advertising remains the primary revenue stream, contributing 96% of the company’s total revenue. The Reality Labs division, which specialises in developing virtual and augmented reality (VR and AR) technologies, has so far only generated losses. By the end of Q2 2024 results, Reality Labs’ loss reached 4.50 billion USD, a 21% increase.

Meta Platforms, Inc. Q3 2024 financial results

On 30 October, Meta released its Q3 2023 financial results. Below are the key figures compared with the same period in 2023:

• Revenue: 40.58 billion USD (+19%)
• Net income: 15.68 billion USD (+35%)
• Earnings per share: 6.03 USD (+37%)
• Operating margin: 43%​ (+300 basis points)
• Advertising revenue: 39.88 billion USD (+18%)
• Reality Labs revenue: 270 million USD (+28%)
• Reality Labs loss: 4.40 billion USD (+20%)
• Number of daily active users: 3.279 billion (+5%)
• Costs and expenses: 23.24 billion USD (+14%)

CEO Mark Zuckerberg explained that revenue growth was driven by advancements in artificial intelligence (AI), which are actively integrated into the company’s applications and business processes. He highlighted Meta AI’s significant success, the rollout of the Llama AI model, and the development of AI-powered smart glasses.

CFO Susan Li shared the company’s forecast, expecting Q4 2024 revenue to range between 45.00 billion and 48.00 billion USD. She also revised the company’s total expense forecast for 2024, lowering it to the 96.00–98.00 billion USD range, down from the previous estimate of 96.00–99.00 billion USD. Li emphasised that the operating losses of the Reality Labs division, which focuses on virtual and augmented reality (VR and AR), would significantly increase year-on-year due to ongoing development and investments aimed at scaling the ecosystem. Additionally, Li mentioned that Meta expects substantial capital expenditure growth in 2025, including increased spending on infrastructure.

Both Zuckerberg and Li also noted the growing number of legal and regulatory challenges, particularly in the European Union and the US, which could significantly affect Meta’s business and financial results.

Meta Platforms, Inc. Q4 2024 financial results

On 29 January 2025, Meta published its Q4 2024 financial results. Below are the key figures compared with the same period in 2023:

• Revenue: 48.38 billion USD (+21%)
• Net income: 20.83 billion USD (+49%)
• Earnings per share: 8.02 USD (+50%)
• Operating margin: 48%​ (+700 basis points)
• Advertising revenue: 46.78 billion USD (+20%)
• Reality Labs revenue: 1.08 billion USD (+1%)
• Reality Labs loss: 4.96 billion USD (+6%)
• Number of daily active users: 3.35 billion (+5%)
• Costs and expenses: 25.02 billion USD (+5%)

In his comments accompanying the earnings release, Mark Zuckerberg highlighted Meta's progress in artificial intelligence and expressed optimism about scaling these technologies throughout 2025. The company continued to focus on personalised AI assistants, developing models capable of writing and deploying code, and making significant investment in computing infrastructure.

Zuckerberg also highlighted the AI glasses business, noting that 2025 could prove to be an important year for assessing its commercial potential.

Commenting on DeepSeek, he acknowledged the Chinese company's innovative developments but emphasised that it was still too early to assess their impact on Meta's infrastructure plans. He added that the company's strategy of making substantial investment in AI infrastructure remained unchanged, as Meta viewed it as a long-term competitive advantage. Additionally, a decline in demand for GPUs did not appear likely, as AI models operating at Meta's scale continued to require substantial computing resources.

Meta Platforms, Inc. Q1 2025 financial results

On 30 April, Meta published its Q1 2025 financial results for the quarter ended 31 March. Key figures compared with the same period in 2024 are as follows:

• Revenue: 42.31 billion USD (+16%)
• Net income: 16.64 billion USD (+35%)
• Earnings per share: 6.43 USD (+37%)
• Operating margin: 41%​ (+300 basis points)
• Advertising revenue: 41.39 billion USD (+16%)
• Reality Labs revenue: 0.41 billion USD (-9%)
• Reality Labs loss: 4.21 billion USD (+16%)
• Family daily active people (DAP): 3.43 billion (+6%)
• Costs and expenses: 24.76 billion USD (+9%)

Meta made a strong start to 2025, exceeding analysts' expectations. Revenue increased by 16%, while earnings per share rose by 35%. The advertising business remained the main growth driver, with advertising revenue increasing by 16.2% due to higher ad prices and more ad impressions. Meta's user base also continued to expand, reaching 3.43 billion daily active people (DAP).

The company continued to invest heavily in artificial intelligence. Meta raised its 2025 capital expenditure (CapEx) guidance to 64–72 billion USD from the previous 60–65 billion USD, with the additional investment directed towards data centres and infrastructure for AI projects.

For Q2 2025, Meta projected revenue in the range of 42.5–45.5 billion USD, in line with analysts' expectations. At the same time, management highlighted potential short-term risks, including weaker advertising demand from Asian companies and broader macroeconomic uncertainty.

Meta Platforms, Inc. Q2 2025 financial results

On 30 July, Metapublished its Q2 2025 financial results for the quarter ended 30 June. The key figures compared with the same period in 2024 are as follows:

• Revenue: 47.52 billion USD (+22%)
• Net income: 18.34 billion USD (+36%)
• Earnings per share: 7.14 USD (+38%)
• Operating margin: 43% (+500 basis points)
• Advertising revenue: 46.56 billion USD (+21%)
• Reality Labs revenue: 0.37 billion USD (+5%)
• Reality Labs loss: 4.53 billion USD (–1%)
• Family daily active people (DAP): 3.48 billion (+6%)
• Costs and expenses: 27.07 billion USD (+12%)

Meta Platforms reported Q2 2025 revenue of 47.52 billion USD, up 22% year-on-year, while earnings per share reached 7.14 USD, up 38% from a year earlier and significantly exceeding analyst expectations of 5.85–5.89 USD. Operating income rose to 20.44 billion USD, with an operating margin of around 43%, up 5 percentage points from 38% a year earlier.

Meta guided for Q3 2025 revenue of 47.5–50.5 billion USD, with revenue growth expected to slow in Q4 due to a high comparison base. At the same time, the company raised its full-year 2025 capital expenditure guidance to 66–72 billion USD and indicated that investment could be even higher in 2026 as it expands its AI infrastructure and hires additional specialists.

Meta Platforms, Inc. Q3 2025 financial results

On 29 October, Metapublished its Q3 2025 financial results for the quarter ended 30 September. The key figures compared with the same period in 2024 are as follows:

• Revenue: 51.24 billion USD (+26%)
• Net income: 2.71 billion USD (–83%)
• Earnings per share: 1.05 USD (–83%)
• Operating margin: 40% (–300 basis points)
• Advertising revenue: 50.08 billion USD (+26%)
• Reality Labs revenue: 0.47 billion USD (+74%)
• Reality Labs loss: 4.43 billion USD (0%)
• Family daily active people (DAP): 3.54 billion (+8%)
• Costs and expenses: 30.71 billion USD (+32%)

Meta reported record Q3 2025 revenue of 51.2 billion USD, up 26% year-on-year and above market expectations. Operating income rose 18%, while the operating margin remained high at 40%. GAAP net income declined due to a one-off tax charge of nearly 16 billion USD, but excluding this effect, the quarter was very strong.

Family of Apps was once again the main growth driver. Revenue and advertising revenue rose 26%, ad impressions rose 14%, average price per ad rose 10%, and daily active users across the company’s apps reached 3.54 billion. Reality Labs increased revenue by 74% to 470 million USD, but the segment remained loss-making.

Meta’s management provided a fairly confident outlook for Q4 2025, implying continued strong business momentum. The company expected revenue of 56–59 billion USD, corresponding to year-on-year growth of 18–22%. This pace implied a continued recovery in the advertising market and sustained demand from large brands and small businesses.

At the same time, Meta expected Reality Labs revenue to decline slightly in Q4 compared with Q3. This was because Quest headset sales peaked in Q3, when distribution channels were being stocked, and new models were launched. Meta expected sales to stabilise in Q4 but not to become a growth driver.

Meta Platforms, Inc. Q4 2025 financial results

On 28 January, Metareleased its Q4 2025 financial results for the quarter ended 31 December. The key figures compared with the same period in 2024 are as follows:

• Revenue: 59.89 billion USD (+24%)
• Net income: 22.76 billion USD (+9%)
• Earnings per share: 8.88 USD (+11%)
• Operating margin: 41% (–700 basis points)
• Advertising revenue: 58.14 billion USD (+24%)
• Reality Labs revenue: 0.96 billion USD (–12%)
• Reality Labs loss: 6.02 billion USD (+21%)
• Family daily active people (DAP): 3.58 billion (+7%)
• Costs and expenses: 35.15 billion USD (+40%)

Meta Platforms’ Q4 2025 results exceeded analysts’ expectations. Revenue increased by 24% year-on-year to 59.89 billion USD, driven by a stronger advertising business, higher engagement across Reels and Instagram, and improved monetisation through AI algorithms.

Earnings per share reached 8.88 USD, compared with the consensus forecast of 8.2 USD, while net income increased by 9% year-on-year to 22.8 billion USD. This demonstrated that Meta was able to maintain high profitability in its core business despite increasing investment in infrastructure and artificial intelligence.

For Q1 2026, management projected revenue of 53.5–56.5 billion USD. Full-year 2026 expenses were expected to total 162–169 billion USD, primarily due to investments in infrastructure, cloud services, and AI. At the same time, the company expected operating income to exceed the 2025 level.

Meta Platforms, Inc. Q1 2026 financial results

On 29 April, Meta published its Q1 2026 financial results for the quarter ended 31 March. The key figures compared with the same period in 2025 are as follows:

• Revenue: 56.31 billion USD (+33%)
• Net income: 26.77 billion USD (+61%)
• Earnings per share: 10.44 USD (+62%)
• Operating margin: 41%​ (0 basis points)
• Advertising revenue: 55.02 billion USD (+33%)
• Revenue Reality Labs: 0.40 billion USD (-2%)
• Loss Reality Labs: 4.03 billion USD (compared with a 4.21 billion USD loss a year earlier)
• Family daily active people (DAP): 3.56 billion (+4%)
• Costs and expenses: 33.44 billion USD (+35%)

Meta Platforms' Q1 2026 results were stronger than expected. Revenue increased by 33% to 56.31 billion USD, exceeding analysts' consensus forecast of 55.45 billion USD. The advertising business remained the main growth driver, with advertising revenue reaching 55.02 billion USD, ad impressions increasing by 19%, and the average price per ad rising by 12%.

Artificial intelligence also supported the results. More than 8 million advertisers were already using Meta's AI tools to create advertisements, while early testing of its video generation technology showed a 3% increase in conversion rates. At the same time, net income was partially supported by a one-off tax benefit of 8.03 billion USD, meaning the increase in EPS cannot be regarded as entirely operational.

For Q2 2026, Meta forecast revenue of 58–61 billion USD. The company's 2026 expense guidance remained unchanged at 162–169 billion USD, while its capital expenditure (CapEx) guidance was raised to 125–145 billion USD due to higher component costs and increased spending on data centres.

Meta Platforms, Inc. Q2 2026 financial results

On 29 July, Meta Platformspublished its Q2 2026 financial results for the quarter ended 30 June. The key figures compared with the same period in 2025 are presented below:

• Revenue: 60.80 billion USD (+28%)
• Net income: 15.85 billion USD (–14%)
• Earnings per share: 6.18 USD (–13%)
• Operating margin: 31% (–1200 basis points)
• Free cash flow: 784 million USD (–91%)

Revenue by segment:

• Advertising revenue: 59.36 billion USD (+27%)
• Family of Apps: 60.37 billion USD (+28%)
• Reality Labs: 431 million USD (+16%)
• Other revenue: 1.01 billion USD (+73%)
• Family daily active people (DAP): 3.60 billion (+3%)
• Costs and expenses: 42.03 billion USD (+55%)

Meta’s Q2 2026 results were mixed. Revenue rose 28% year-on-year to 60.8 billion USD, exceeding market expectations. However, earnings per share fell 13% to 6.18 USD, below the consensus forecast. Advertising, which generated 59.4 billion USD in revenue, along with monetisation from WhatsApp and Threads, drove growth.

The main concern was a 91% decline in free cash flow to 784 million USD due to substantial investment in AI infrastructure. Additional pressure came from Reality Labs, which recorded an operating loss of 4.6 billion USD, while audience growth slowed from 4% in the previous quarter to 3%. Higher operating expenses made the company’s financial results less predictable.

For Q3 2026, Meta’s management forecasts total revenue of 61–64 billion USD. The company also raised the lower ends of its full-year guidance ranges for expenses to 165–169 billion USD and total capital expenditure to 130–145 billion USD. The continued scaling of AI projects is expected to put further pressure on margins and free cash flow over the coming reporting periods.

Meta Platforms, Inc. Q3 2026 financial results

On 21 October 2026, Meta Platformspublished its Q3 2026 financial results for the quarter ended 30 September. The key figures compared with the same period in 2025 are presented below:

• Revenue: 64.60 billion USD (+26%)
• Net income: 9.86 billion USD (+264%)
• Earnings per share: 3.83 USD (+265%)
• Operating margin: 20% (–2000 basis points)
• Free cash flow: –2.12 billion USD (compared with 10.63 billion USD a year earlier)

Revenue by segment:

• Advertising revenue: 63.06 billion USD (+26%)
• Family of Apps: 64.16 billion USD (+26%)
• Reality Labs: 443 million USD (–6%)
• Other revenue: 1.10 billion USD (+59%)
• Family daily active people (DAP): 3.64 billion (+3%)
• Costs and expenses: 51.61 billion USD (+68%)

Meta Platforms’ quarterly results showed continued strong growth in the advertising business, but substantial investment in artificial intelligence has become a significant financial burden. Revenue rose 26% to 64.60 billion USD, exceeding market expectations. However, reported earnings per share came in at 3.83 USD, below the consensus forecast due to a one-off legal charge of 9.89 billion USD. Excluding this charge, EPS would have been around 7.40 USD.

Following the release of the report on 21 October, Meta shares came under significant pressure. Investors were concerned about rising AI spending, negative free cash flow, and the company’s plan to raise additional capital by issuing new shares.

Meta’s advertising business continues to grow strongly. Advertising revenue increased 26% during the quarter to 63.06 billion USD. Ad impressions rose 10%, while the average price per ad increased 14%. However, growth in advertising revenue has so far failed to offset the rapid increase in Meta’s overall costs.

Total costs and expenses rose 68% during the quarter to 51.61 billion USD, while operating income fell 37% to 12.99 billion USD. The operating margin declined from 40% to 20%. However, a significant portion of this deterioration was due to a one-off charge of 9.89 billion USD related to settling legal claims.

The most concerning figure in the report was free cash flow. In Q3, it stood at –2.12 billion USD, compared with positive free cash flow of 10.63 billion USD a year earlier. Meta generated 32.79 billion USD from operating activities but spent 34.91 billion USD on capital expenditure, including finance lease payments. This is a significant negative signal, as further increases in spending could limit Meta’s ability to fund its development entirely from internally generated cash.

Management’s outlook raised additional concerns. Meta increased the lower end of its expected 2026 capital expenditure range from 130 billion USD to 135 billion USD, while leaving the upper end unchanged at 145 billion USD. The company also warned that substantial investment in AI would continue in 2027. At the same time, the timing of significant profits from new products remains uncertain.

Another negative factor was Meta’s decision to create a new class of non-voting Class C shares. On 26 October, Meta launched a 35 billion USD securities offering, comprising 22.5 billion USD of Class A common stock and approximately 12.5 billion USD of depositary shares linked to mandatory convertible preferred securities. In addition, once Class C shares begin trading, the company plans to launch a program to sell up to 60 billion USD of these shares. This confirms that Meta is beginning to rely more heavily on equity, alongside cash flow and debt, to finance its large-scale AI infrastructure.

Concerns also grew in the credit market. The cost of insuring Meta’s debt against default rose to a record 114.79 basis points. This indicates increased demand for protection against credit risk.

Despite these risks, Meta’s management remains optimistic about the company’s business prospects. For Q4, the company forecasts revenue of 73–76 billion USD and expects strong growth to continue in 2027. Another positive development was its plan to reduce Reality Labs losses.

Overall, Meta’s Q3 2026 report heightened investor concerns about the financial consequences of the AI race. The company maintains a strong position in the advertising market. Revenue continues to grow, but costs are rising faster than earnings, and capital expenditure has already pushed free cash flow into negative territory. Plans to issue new shares could put further pressure on META shares.

Analysis of key valuation multiples for Meta Platforms, Inc.

Below are Meta’s key valuation multiples following its Q3 2026 financial results, calculated at a share price of 620 USD.