Meta reports third-quarter earnings after the bell on Wednesday, with investors watching for signs that its AI efforts will bolster future sales. Analysts also expect to see whether the company plans to raise data center spending, and a state attorney general settlement could weigh on results.
Meta is slated to report third-quarter earnings after the bell on Wednesday, and investors will look for signs that its latest artificial intelligence efforts will bolster future sales. Analysts polled by LSEG expect $5.75 in earnings per share and revenue of $63.2 billion.
The company enters the report after a strong quarter for its AI products. The Muse AI personal assistant tool debuted in September and shot to the top of Apple's iOS app store. That momentum helped Meta end September with its best month on Wall Street since 2022.
Capex is the number to watch
Wall Street will likely monitor whether Meta plans to increase its data center-related capital expenditures. In July, the company narrowed its 2026 capex guidance to between $130 billion and $145 billion, a $5 billion increase to the low end of its prior range.
That spending coincided with a drop in free cash flow in the second quarter. Meta's free cash flow shrank to $784 million from $8.55 billion in the same quarter a year earlier. Analysts expect capex to swell to $196.3 billion in 2027, according to FactSet.
Meta is also the first hyperscaler to reveal quarterly financials this tech earnings cycle. Alphabet, Microsoft and Amazon report next week, and the four companies together have called for roughly $730 billion in capital expenditures this year.
A $10 billion legal charge looms
The quarter was not all AI agents, however. Meta agreed in August to pay nearly $17 billion to settle a lawsuit brought by a group of state attorneys general, including California's Rob Bonta.
Wolfe Research analysts wrote in a Monday note that the settlement could cause Meta to miss on third-quarter EPS because of a related $10 billion legal charge that the street has not yet accounted for. Meta also still faces personal injury claims and a separate federal case involving a group of nationwide school districts.
Source: CNBC
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