{"id":36981,"date":"2025-10-30T04:11:24","date_gmt":"2025-10-30T04:11:24","guid":{"rendered":"https:\/\/agooka.com\/news\/usa\/5-of-the-biggest-takeaways-from-metas-q3-earnings-call\/"},"modified":"2025-10-30T04:11:24","modified_gmt":"2025-10-30T04:11:24","slug":"5-of-the-biggest-takeaways-from-metas-q3-earnings-call","status":"publish","type":"post","link":"https:\/\/agooka.com\/news\/usa\/5-of-the-biggest-takeaways-from-metas-q3-earnings-call\/","title":{"rendered":"5 of the biggest takeaways from Meta&#8217;s Q3 earnings call"},"content":{"rendered":"<figure><img decoding=\"async\" src=\"https:\/\/i.insider.com\/690283cb599d46a4ccc11a3a?format=jpeg\" alt=\"Meta CEO Mark Zuckerberg delivers a speech during the Meta Connect event in Menlo Park\"\/><figcaption>Meta shares fell nearly 9% in after-hours trading.<\/p>\n<p>Carlos Barria\/REUTERS<\/p>\n<\/figcaption><\/figure>\n<ul>\n<li>Meta reported Q3 earnings on Wednesday as shares fell nearly 9% in after-hours trading.<\/li>\n<li>Meta&#039;s huge Q3 tax bill and EPS that missed expectations weighed down shares.<\/li>\n<li>AI is enhancing engagement across Meta&#039;s social media platforms and driving targeted advertisements.<\/li>\n<\/ul>\n<p>Meta&#039;s third-quarter earnings report did not land well with investors.<\/p>\n<p>In after-hours trading, Meta shares tumbled nearly 9% on Wednesday during the investor call.<\/p>\n<p>Meta beat Wall Street estimates with a reported revenue of $51.24 billion. However, a $15.9 billion tax charge, an earnings per share that missed expectations, and some concerns over whether Meta&#039;s huge investments in AI will translate to profit, weighed down the company&#039;s shares.<\/p>\n<p>From Meta&#039;s burgeoning capital expenditure to what is driving revenue for the company, here are the biggest takeaways from the social media giant&#039;s call with analysts.<\/p>\n<h2>1. The cost of &#039;novel capabilities&#039;<\/h2>\n<p>Meta CEO Mark Zuckerberg and CFO Susan Li spent a good part of the call discussing the company&#039;s soaring AI infrastructure spending.<\/p>\n<p>Meta now expects to spend between $70 billion and $72 billion on infrastructure this year, and also expects expenditure growth in 2026 to be &quot;notably larger&quot; than in 2025 as AI workloads continue to rise.<\/p>\n<p>Li said during the call that Meta plans to &quot;invest aggressively&quot; in both its own data centers and third-party cloud capacity, with infrastructure costs putting &quot;upward pressure&quot; on capital expenditures.<\/p>\n<p>&quot;In the very worst case,&quot; Zuckerberg said, Meta would have simply &quot;pre-built for a couple of years,&quot; absorbing the extra costs through depreciation while it grows into the added capacity. The greater danger, he said, is &quot;underinvesting&quot; in computing.<\/p>\n<p>&quot;We&#039;re really trying to build novel capabilities,&quot; said Zuckerberg. &quot;This is not like a check-the-box exercise.&quot;<\/p>\n<p>Employee pay is also climbing. Li said compensation will be the second-largest contributor to expense growth in 2026, reflecting a full year of salaries for AI specialists hired in 2025 and new technical recruits in &quot;priority areas.&quot;<\/p>\n<p>&quot;Compute and talent are where we&#039;re leaning in hardest,&quot; Li said. &quot;That&#039;s what&#039;s going to drive Meta&#039;s AI advantage.&quot;<\/p>\n<h2>2. Reality Lab woes<\/h2>\n<p>Meta&#039;s Reality Labs is still bleeding billions, though losses have narrowed slightly from the previous quarter.<\/p>\n<p>The unit, which houses Meta&#039;s virtual reality hardware, AI-powered devices, and metaverse initiatives, reported $470 million in revenue and an operating loss of $4.43 billion for the quarter, compared with a $4.53 billion loss in the second quarter.<\/p>\n<p>Li said Reality Labs&#039; revenue got a temporary boost as retailers stocked up on Quest headsets ahead of the holiday season. But she acknowledged &quot;headwinds&quot; to the Quest headsets this year, since Meta hasn&#039;t released a new model.<\/p>\n<p>&quot;We&#039;re still expecting significant year-over-year growth in AI Glasses revenue in Q4 as we benefit from strong demand for the recent products that we&#039;ve introduced,&quot; said Li, &quot;But that is more than offset by the headwinds to the Quest headsets.&quot;<\/p>\n<h2>3. Addressing the tax charge<\/h2>\n<p>Meta took a massive $15.9 billion one-time tax charge this quarter, tied to changes under President Donald Trump&#039;s One Big Beautiful Bill Act, which passed in July.<\/p>\n<p>The company said the new tax law&#039;s implementation allowed for a &quot;valuation allowance against our US federal deferred tax assets,&quot; resulting in a one-time, non-cash income tax expense.<\/p>\n<p>Li said that despite the hefty charge, Meta expects its overall tax burden to drop going forward. The company anticipates a &quot;significant reduction&quot; in federal cash tax payments thanks to provisions in the new legislation.<\/p>\n<p>According to Li, without the one-off charge, Meta&#039;s effective tax rate would have fallen from 87% to 14%. Li said the adjustment &quot;positions us favorably from a cash tax standpoint&quot; as Meta continues its heavy investments in AI infrastructure and data centers.<\/p>\n<h2>4. AI is booting engagement<\/h2>\n<p>Zuckerberg said AI is paying off across the company&#039;s core apps as well as for advertisements.<\/p>\n<p>Zuckerberg told investors that AI-powered recommendation systems have increased time spent on Facebook by 5%, on Threads by 10%, and boosted video viewing on Instagram by more than 30% over the past year.<\/p>\n<p>&quot;As video continues to grow across our Apps, Reels now has an annual run rate of over $50 billion,&quot; said Zuckerberg. &quot;Improvements in our recommendation systems will also become even more leveraged as the volume of AI-created content grows.&quot;<\/p>\n<p>Li added that Meta&#039;s generative AI features for advertisers, including AI-generated music, are also &quot;driving increased performance&quot; and are expected to be able to offset losses generated by Reality Labs.<\/p>\n<p>Whether the profit AI generates in these areas could offset Meta&#039;s planned capex spending remains to be seen.<\/p>\n<h2>5. AI glasses are a hot commodity<\/h2>\n<p>Ahead of the call, some analysts had been skeptical about whether the AI-glasses hype would translate to sales. Forrester VP and research director Mike Proulx told Business Insider that while early adoption of Meta&#039;s glasses will likely be driven by &quot;tech-curious&quot; consumers, demos may still &quot;far outpace actual purchases.&quot;<\/p>\n<p>On the call, however, Zuckerberg said the company&#039;s AI-powered glasses could become a &quot;very profitable investment&quot; as sales of its new line surge.<\/p>\n<p>During the call, Zuckerberg told analysts that Meta&#039;s collaborations with Ray-Ban and Oakley are &quot;going very well&quot; and that revenue will come not just from device sales but also from the services layered on top of them.<\/p>\n<p>Zuckerberg said the AI capabilities built into the glasses will soon become &quot;the main thing people are using them for,&quot; and that Meta&#039;s new Ray-Ban Displays sold out in &quot;almost every store&quot; within 48 hours, with demo appointments booked through the end of next month.<\/p>\n<p>Read the original article on Business Insider<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Meta shares fell nearly 9% in after-hours trading. Carlos Barria\/REUTERS Meta reported Q3 earnings on Wednesday as shares fell nearly 9% in after-hours trading. Meta&#039;s huge Q3 tax bill and EPS that missed expectations weighed down shares. AI is enhancing engagement across Meta&#039;s social media platforms and driving targeted advertisements. Meta&#039;s third-quarter earnings report did [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":36982,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[],"class_list":{"0":"post-36981","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-usa"},"_links":{"self":[{"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/posts\/36981","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/comments?post=36981"}],"version-history":[{"count":0,"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/posts\/36981\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/media\/36982"}],"wp:attachment":[{"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/media?parent=36981"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/categories?post=36981"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/tags?post=36981"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}