Meta Q3 earnings live updates: Stock falls 7% after EPS miss, tax charge

Meta CEO Mark Zuckerberg speaks at the 2025 Meta Connect conference in Menlo Park, California, on September 17, 2025.

BENJAMIN LEGENDRE/AFP via Getty Images

A $15.9 billion tax charge dragged down Meta’s earnings last quarter.

The social media giant and AI hyperscaler reported revenue of $51.24 billion, beating Wall Street’s estimates of $49.5 billion. Earnings per share came in at $6.03, compared to estimates for $6.72. The stock fell more than 7% in after-hours trading.

Heading into the 4:30 p.m. ET call with analysts, Wall Street is eager to hear more on its plans for capex and how it will monetize AI. Meta recently invested $14 billion in Scale AI with the goal of reaching AI “superintelligence.” The company is on track to spend upwards of $70 billion on AI projects this year, and investors will be listening closely to any changes to that figure.

Analysts say they’re also listening for news on AI-driven improvements to its ad business and updates on devices like its Ray-Ban AI glasses lineup.

And we’re off! Meta’s analyst call begins

CEO Mark Zuckerberg and CFO Suan Li are on the call. They’ll begin by reading through their prepared remarks before fielding questions from analysts in a live Q&A.

Meta expects capex growth to be “notably larger” next year.

Meta said it expects to spend between $70 billion and $72 billion on infrastructure this year as it builds out the computing power behind its AI ambitions, slightly higher than the $66 billion to $72 billion range it projected last quarter.

The company said its demand for computing capacity has “expanded meaningfully,” prompting bigger investments in data centers and cloud services. Meta added that its infrastructure spending will keep rising next year, with capital expenditure growth in 2026 expected to be “notably larger” than in 2025.

Meta’s massive tax charge

Meta paid a one-time tax charge of $15.93 billion this quarter.

The company expected a “significant reduction” in federal cash tax payments thanks to the One Big Beautiful Bill Act, which passed in July. The act’s implementation allowed for a “valuation allowance against our U.S. federal deferred tax assets,” the company said, causing them to pay a one-time, non-cash income tax charge of $15.93 billion.

Otherwise, Meta says:

Effective tax rate would have decreased by 73 percentage points to 14%, compared to the reported effective tax rate of 87%.
Net income would have increased by $15.93 billion to $18.64 billion, compared to the reported net income of $2.71 billion.
Diluted EPS would have increased by $6.20 to $7.25, compared to the reported diluted EPS of $1.05.

Meta’s Reality Labs continues to burn through billions.

Meta’s Reality Labs revenue was $470 million with an operating loss of $4.432 billion for the quarter. The division houses Meta’s AI consumer hardware, virtual reality gear, and metaverse spending, among other things. That includes Meta’s Ray-Ban Displays, which the company announced in September. Reality Lab’s losses are shrinking, albeit slightly, with the company losing $4.53 billion last quarter.

Meta reports Q3 revenue of $51.2 billion, EPS of $6.03

Third Quarter Results

Revenue $51.24 billion, +26% y/y, estimate $49.59 billion
(Bloomberg Consensus)
Advertising rev. $50.08 billion, +26% y/y, estimate $48.59
billion
Family of Apps revenue $50.77 billion, +26% y/y, estimate
$49.04 billion
Reality Labs revenue $470 million, +74% y/y, estimate $317
million
Other revenue $690 million, +59% y/y, estimate $597.4 million
Operating income $20.54 billion, +18% y/y
Family of Apps operating income $24.97 billion, +15% y/y,
estimate $24.79 billion
Reality Labs operating loss $4.43 billion vs. loss $4.43
billion y/y, estimate loss $5.16 billion
Operating margin 40% vs. 43% y/y
EPS $1.05 vs. $6.03 y/y
Ad impressions +14% vs. +7% y/y, estimate +10.8%
Average price per ad +10% vs. +11% y/y, estimate +10.5%
Average Family service users per day 3.54 billion, +7.6% y/y,
estimate 3.48 billion

Source: Bloomberg

What a Forrester VP will be listening for

Mark Zuckerberg at T-Mobile Arena — Mark Zuckerberg attends the UFC 320 event at T-Mobile Arena on October 04, 2025 in Las Vegas, Nevada.

Chris Unger/Zuffa LLC

Forrester VP and Research Director Mike Proulx told Business Insider that Meta’s third quarter was “flooded with feature updates, device announcements, and operational moves,” with AI as the common thread. “Of particular note is the launch of Meta Ray-Ban Display glasses, which effectively launched a new computing platform,” Proulx said. “During the earnings call, I’ll be listening for an update on sales. I suspect these glasses will mostly attract early tech-curious adopters, and that demos will far outpace actual purchases.”

He added that Reels’ prominence on Instagram continues to grow as the app edges closer to TikTok, and that advertisers are unlikely to pull back spending despite Meta losing brand-safety accreditation from the Media Rating Council, given the platform’s reach and performance.

What is Meta’s TBD crew building?

Meta has quietly assembled one of the most expensive AI teams in Silicon Valley under its Meta Superintelligence Labs division, hiring top researchers from DeepMind and OpenAI and spending billions on infrastructure. Yet the elite unit responsible for building next-generation AI models — literally named TBD — remains a black box. Investors will be listening closely for any clues from Zuckerberg on what, exactly, it’s building.

Meta has suggested its new Ray-Ban Displays are selling well

Meta Ray-Ban smart glasses in a display case — The Meta Ray-Ban smart glasses

Joan Cros/NurPhoto via Getty Images

In September, the company debuted its new Ray-Ban Displays at the Connect conference. The glasses come with a built-in screen that displays text messages, maps, and captions over the real world.

The Displays went on sale in late September. Within days, CTO Andrew Bosworth posted on Threads that the glasses were sold out and demos were booked up through November at “almost every store.”

Expect further questions on the analyst call about the sales mix between the screen-free Meta Ray-Ban AI glasses and the more expensive Ray-Ban Displays.

Meta and OpenAI’s rival AI feeds

In September, Meta released its new short-form AI video feed, Vibes. Some tech founders and execs quickly roasted it as “AI slop.” Days later, OpenAI released its new video generation model, Sora 2. Its own short-form Sora app quickly topped the App Store charts.

OpenAI has said that 1 million people downloaded the Sora app within five days, while Similarweb data indicates that the Meta AI app’s downloads surged by 100,000 after the Vibes feed launched. We might get some further data points on Vibes engagement among Meta’s users on the earnings call.

Meta’s changing head count

Illustration of Meta, Instagram and Facebook logos — The Meta employee made the comments in a Blind post on Wednesday

Getty Images

Meta has faced some dramatic changes to its headcount in the past few months. After doling out big contracts to staff up its superintelligence unit, Meta cut 600 jobs from it. Meta also cut staff in its risk division as the company automated its review process, per a memo viewed by Business Insider.

These cuts come after January’s broader layoffs, when Meta cut 5% of its workforce — roughly 3,600 employees — that the company labeled “low performers.”

It’ll be interesting to see if Zuckerberg or CFO Susan Li talks about plans for future head count growth — or if they anticipate head count to remain flat or decrease in the coming quarters.

Keep track: How many times AI is mentioned vs. the metaverse

When Facebook rebranded to Meta in 2021, Zuckerberg declared a “very long-term bet” on the metaverse. The company then spent billions on projects like Horizon. The fervor has since quieted, though the company announced a new AI feature to build 3D worlds with text at its September Meta Connect event.

On Monday, Meta CTO Andrew Bosworth told employees the company was reshuffling its metaverse unit in a memo viewed by Business Insider. “The priority of the metaverse work remains unchanged, and it continues to be a companywide priority,” he wrote.

Listen for any changes to the AI capex number for 2025

Mark Zuckerberg said Meta could spend up to $72 billion this year on AI infrastructure. Will Zuck raise that number even higher? It’s possible, but if all this AI capex spend is really hurting Meta’s free cash flow and margins, investors might start feeling uneasy.

That’s why they’ll be laser-focused on Meta’s advertising business, which still makes up most of the company’s earnings. If ad numbers are healthy — and right now, expectations from Wall Street are high — then Zuck probably has more runway for his AI bets.

DA Davidson is eyeing comparisons with Alphabet

Tech analysts at DA Davidson wrote ahead of Meta’s earnings that they’re watching for how Meta does compared to its Magnificent Seven peer Alphabet, which also reports results on Wednesday.

“We expect META to continue outgrowing Google’s ad revenue, though growth may decelerate on tougher comps (including elections),” the firm said in a client note. “We do not expect growth at Google to decelerate significantly, though we are monitoring OpenAI closely, as we believe the likely introduction of advertising around ChatGPT may create a headwind for Google Search advertising growth.”

DA Davidson has an $825 price target and a “Buy” rating on Meta stock.

CFRA sees Meta meeting high expectations, thinks capex will remain lofty

A visitor stands by a sign posted in front of Meta headquarters on January 29, 2025 in Menlo Park, California.

Justin Sullivan/Getty Images

CFRA analysts think Meta earnings will deliver.

“Ahead of Q3 2025 results on October 29, we believe consensus views are well aligned with reality, as META’s AI investments allow it to outpace the broader digital ad market,” CFRA said in a note. “We currently see META posting a growth pace of about 21%-22% in Q3.”

Expect Meta’s AI spending plans to stay elevated, in the $66-72 billion range for 2025, the firm said.

CFRA rates the stock a “Buy” and has an $880 price target for the stock, representing potential upside of 16%.

Meta is a top pick for JPMorgan, with analysts bullish on AI strategy and superintelligence

JPMorgan’s Doug Annuth wrote that he’s bullish on the social media company’s AI push ahead of earnings. After a big round of layoffs in Meta’s AI unit, there’s a lot of anticipation for updates on the superintelligence strategy.

“We’re bullish on AI Ad improvements, Reels, & Video. META continues to execute well across its AI strategy & push toward personal superintelligence prioritizing ads, engagement, business messaging, Meta AI, & AI Devices.”

The bank has an $875 price target on the stock, implying 15% upside.

BofA says AI outlook will be ‘critical’ for sentiment

A woman wears the Meta Quest 3 headset — A woman wears the Meta Quest 3, the standalone mixed-reality headset, on March 5, 2025.

Joan Cros/NurPhoto via Getty Images

Bank of America analysts say they’re watching what Meta says about AI, and that a disappointing update on monetization or future ambitions could sour investor sentiment.

They also said that they’ll be looking at comparisons with Alphabet, which also reports results on Wednesday.

“Meta will report concurrently with Alphabet & we think investors will focus on revenue growth differentials & relative margin performance,” Bank of America analysts wrote.

The bank continued: “Meta should compare well, we expect 23% y/y growth vs 13% for Google properties in 3Q, with Meta possibly accelerating on AI driven improvements in targeting, deeper CRM integrations, video model unification & growing advertiser adoption of Gen-AI-powered creative tools.”

The bank has a $900 price target on Meta stock, a 19% increase from current levels.

Wall Street is predicting Q3 revenue of $49.5 billion and EPS of $6.72

THIRD QUARTER

Revenue estimate $49.57 billion
Advertising rev. estimate $48.57 billion
Family of Apps revenue estimate $49.02 billion
Reality Labs revenue estimate $317 million
Other revenue estimate $597 million
Operating income estimate $19.47 billion
Family of Apps operating income estimate $24.77 billion
Reality Labs operating loss estimate $5.18 billion
Operating margin estimate 39.3%
EPS estimate $6.72
Ad impressions estimate +10.8%
Average price per ad estimate +10.5%
Average Family service users per day estimate 3.48 billion
FOURTH QUARTER
Revenue estimate $57.35 billion
Capital expenditure estimate $21.13 billion
YEAR
Total expenses estimate $115.63 billion
Capital expenditure estimate $69.29 billion

Source: Bloomberg

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