Meta shares fall as AI spending fears offset earnings beat

Meta Platforms shares fell about 3% in premarket trading on Thursday, October 22, as investors weighed fast growth at its Muse AI agent against the rising cost of building the infrastructure behind it, Reuters reported via U.S. News. The decline reversed gains of as much as 5% in after-hours trading on Wednesday, Fortune reported. Wall Street's reaction was mixed. At least 13 brokerages raised their price targets, according to LSEG data cited by Reuters, but several firms questioned how Meta will pay for its spending.cnbc.com+1

A beat, offset by costs

Third-quarter revenue rose 26% to $64.6 billion, and earnings came in at $3.83 per share, according to CNBC. Meta forecast fourth-quarter revenue of $73 billion to $76 billion. Per-share earnings included a $9.9 billion charge tied to an August 2026 multistate attorneys general agreement, the earnings call transcript shows. Meta raised the bottom of its 2026 capital expenditure range, which now stands at $135 billion to $145 billion, compared with $130 billion to $145 billion before, its press release said. Quarterly capex reached $34.9 billion, and free cash flow turned negative at $2.12 billion, Reuters noted.investor.atmeta.com+3

To help fund the AI buildout, Meta plans to issue one nonvoting Class C share for every Class A and Class B share held in January, which works out to an effective two-for-one split, The Daily Upside reported. Mark Zuckerberg said more than 10 million people in the U.S. and Canada have set up Muse agents, and that Meta would probably work on monetization "somewhat sooner" than its usual approach, per Fortune.fortune.com+1

Bulls and skeptics

Barclays analyst Ross Sandler called Muse "a game changer for the META narrative" and raised his target to $880 from $780, CNBC reported. Citi's Ronald Josey moved his target to $905 from $895, saying Meta is "entering into an AI product super-cycle." Goldman Sachs raised its target to $860 from $725.cnbc.com

Other firms that remain positive on the stock still trimmed their targets and raised concerns. Wells Fargo lowered its target to $995 from $1,000 and pointed to uncertainty around capital raising and 2027 costs, Asianet Newsable reported. TD Cowen, which cut its target to $850 from $865, said it expects Meta to issue equity or debt to fund its AI infrastructure. Piper Sandler also lowered its target to $850, from $875, and raised its 2027 operating expense and capex forecasts.newsable.asianetnews.com

Legal overhang

The report came hours after a New Mexico judge ordered Meta to pay a $25 billion penalty in a data-privacy case linked to Cambridge Analytica. Meta plans to appeal, Reuters reported. Deutsche Bank's Benjamin Black argued that investors increasingly treat computing infrastructure as an asset that generates revenue rather than as a cost, a view he called "positive thesis creep."money.usnews.com