Meta boosts bet on AI with spending outlook, new stock class; Q3 results beat estimates

[SAN FRANCISCO] Meta Platforms boosted its capital spending outlook and announced plans for a new class of non-voting stock, escalating its already-stratospheric bet on artificial intelligence. 

Capital expenditures will be US$135 billion to US$145 billion in 2026, the social media giant said during its quarterly earnings report on Wednesday (Oct 21), raising the bottom end of the range from US$130 billion.

The new class of shares, meanwhile, will be distributed to existing investors through a stock dividend. Holders will get one share of the new stock in what will essentially be a two-for-one stock split, Meta said. It expects trading of the new shares to begin in January.

The stock will also be a tool to help further Meta’s expansion. It will be used for capital fundraising, employee compensation and potential acquisitions, the company said.

The moves show that Meta has confidence that its spending on AI will bear fruit. Chief executive officer Mark Zuckerberg has struggled to persuade investors to accept the company’s ballooning expenses for ambitious AI bets. But in recent months, Meta has made headway with its technology.

“Our investments are paying off, the core business is strong, and we’re seeing velocity across the board,” Zuckerberg said in Wednesday’s report.

The CEO touted the success of Meta’s new Muse AI agent, which more than 10 million people have used in the US and Canada over the service’s first six weeks.

“Now that Muse has clear product market fit, we are entering a new phase and a more operational phase that is focused on scaling it,” Zuckerberg said during a conference call with analysts.

Meta shares rose more than 3 per cent in after-hours trading on Wednesday. They had gained about 6 per cent in 2026 so far through the close in New York.

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Earnings beat estimates

As part of the report, Meta said fourth-quarter revenue would be US$73 billion to US$76 billion. Analysts had estimated US$73.6 billion on average, according to data compiled by Bloomberg.

Third-quarter revenue rose 26 per cent to US$64.6 billion, topping the US$63.3 billion estimate. Earnings amounted to US$3.83 a share in the period, beating the US$3.57 estimate.

Over the last year and a half, Zuckerberg has refocused the company’s efforts on advancing in the AI race. The push has included committing hundreds of billions of dollars to build out the infrastructure needed to support its models and rebuilding its AI unit under head Alexandr Wang.

Earlier in October, Meta launched Muse Wonder, a long-awaited new AI model with “frontier capabilities” that its leadership said put it on par with OpenAI’s ChatGPT and Anthropic’s Claude when it comes to coding or working through financial or legal questions.

If Meta’s claims hold up to outside testing, and Muse Wonder gains traction with researchers and developers, it would mark a significant turnaround for the company, whose models in 2025 fell flat in Silicon Valley.

The Muse personalised AI assistant debuted in September. It is designed to automate a range of tasks for consumers, including shopping, buying movie tickets and scheduling appointments. Muse quickly rose to the top of mobile app charts.

But that success has come with a cost. Meta noted that the AI agent requires a great deal of computing power. That is one of the reasons the company has not launched the agent globally yet.

Zuckerberg said that Muse should remain free for most people, with Meta making money through transaction fees paid by businesses, subscriptions for heavy users and customers who want access to the most advanced models, and paid tools for companies that rely on Muse at work.

“If compute efficiency continues improving quickly for another few years, which we think is highly likely, then Muse will be highly profitable over multiple years,” he added.

Meta, owner of Instagram, Facebook and WhatsApp, generates most of its current revenue from advertising.

Zuckerberg also said that CJ Desai will lead Meta’s new enterprise platform, the business the company is building to sell access to its models and AI services. Bloomberg News first reported on this emerging cloud business.

Meta still has a lot of spending left to do before the end of 2026. Even though the midpoint of its capital expenditures outlook is US$140 billion, the Menlo Park, California-based company has only spent about US$86 billion through the first nine months. 

Meta also signalled that it will take longer to see returns from some of its newer AI investments, even as its core business helps absorb the cost.

“While these investments will take longer to generate returns than those in our core business”, chief financial officer Susan Li said, “the breadth of monetisation opportunities and internal efficiencies gives us confidence in their long-term potential”.

Meta is cutting costs elsewhere as it bulldozes money into AI. Headcount was down 15 per cent year over year following significant job cuts, and the company has pledged to narrow losses at Reality Labs, its hardware division.

Meta expects Reality Labs losses of as much as US$19 billion in 2026, before falling to around US$15 billion in 2027 as it reallocates spending toward other priorities – “primarily AI”.

In announcing the new stock class, Meta also said the non-voting shares would ensure that Zuckerberg continues to lead the company “into the next era”. BLOOMBERG