What happened?
Shares of social network operator Meta Platforms (NASDAQ: META) fell 5.7% in the morning session after pre-market gains were erased, as surging artificial intelligence capital expenditures overshadowed better-than-expected third-quarter revenue and fourth-quarter guidance.
In a regulatory filing reported by Bloomberg, Meta revealed roughly $825 billion in future spending commitments for AI data centers, energy infrastructure, and computing capacity, up from nearly $700 billion disclosed in July. The obligations include $355.73 billion in uncommenced leases and $454.52 billion in non-cancelable contracts, with $121.41 billion due in 2027 alone. That long-term liability overhang landed as Meta's third-quarter capex reached $34.91 billion, driving free cash flow to negative $2.12 billion and prompting management to lift the bottom of its 2026 capex guidance to $135 billion to $145 billion, the company said in its earnings release.
Revenue grew 26% to $64.60 billion and fourth-quarter sales guidance topped consensus. EPS (GAAP) clocked in at $3.83 vs analyst expectations of $5.46 (29.9% miss partly due to a $9.89 billion youth-litigation charge, but excluding this, EPS would have been $7.40, a strong beat). In addition, Meta raised full-year expense guidance to $175 billion to $179 billion, while Chief Financial Officer Susan Li signaled on the earnings call that aggressive AI investments will continue into 2027 to support its compute-intensive Muse agent network. Compounding dilution worries, Meta also announced a new non-voting Class C share class designed to finance long-term infrastructure needs.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Meta? Access our full analysis report here, it’s free.
What is the market telling us
Meta’s shares are quite volatile and have had 16 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 10 days ago when the stock gained 3.6% on the news that independent app intelligence revealed the company's standalone artificial intelligence assistant, Muse, posted early user retention rates rivaling OpenAI's ChatGPT.
Sensor Tower data for September, covered by CNBC and Yahoo Finance, showed that Meta's Muse generated a 73.3% Day-1 retention rate across 81 countries, compared with 41.3% for ChatGPT. While user churn accelerated over the full two-week window—with ChatGPT surpassing Muse around Day 9 to finish at 26.8% compared to Muse's 22.5% at Day 14—the assistant maintained a Day-7 rate above 30% and outperformed Threads and Grok Bot.
The research firm estimated that Muse reached five million downloads within 22 days of its September launch. The engagement metrics surface as Meta prepares for its October 27 quarterly earnings report, having raised its 2026 capital expenditure guidance to between $130 billion and $145 billion in a July SEC filing to support aggressive infrastructure expansion. For Meta, demonstrating that consumer AI agents can foster daily engagement helps ease market skepticism surrounding record computing outlays. If initial curiosity converts into durable querying habits rather than brief novelty downloads, Meta secures a direct consumer gateway that supports long-term return on invested capital.
Meta drew additional momentum from speculation that it is preparing to unveil a new artificial intelligence model codenamed Watermelon, detailed in write-ups from CNBC. The anticipation followed a post on social media platform X by Meta AI chief Alexandr Wang, who wrote "vibes kinda good" alongside a watermelon emoji.
Meta is flat since the beginning of the year, and at $652.96 per share, it is trading 16% below its 52-week high of $777.59 from September 2026. Investors who bought $1,000 worth of Meta’s shares 5 years ago would now be looking at an investment worth $2,012.
ONE MORE THING: 3 Hidden Platforms Growing 3X Faster than Amazon, Google, and PayPal. Amazon, Google, and Meta all followed the same playbook: Dominate an ignored market. Build an unbeatable moat. Scale until you’re unstoppable.
These three platforms are running that exact playbook right now. The early investors in Amazon made fortunes. The early investors in these could do the same. Get All 3 Stocks Here for FREE.
