Meta shares red as hit by tax charge; 2026 capex to grow notably

Meta Platforms Inc on Wednesday said a large one time tax charge led third quarter profit to fall 83%, while it guided for "notably" larger capex growth next year to meet AI demand.

Shares in the Menlo Park, California-based technology and WhatsApp owner sank 7.8% after hours in New York on Wednesday. They had earlier closed up slightly at USD751.67.

In the three months to September, Meta said Q3 revenue climbed 26% to USD51.24 billion from USD40.59 billion.

Net income tumbled 83% to USD2.71 billion from USD15.69 billion a year prior. Diluted earnings per share fell to USD1.05 from USD6.03.

The net income decline was largely due to a USD18.95 billion provision for income tax, compared to USD2.13 billion in the 2024 period.

Meta said it expects a "significant reduction" in US tax payments for the remainder of 2025 and future years due to the new US tax bill.

However, Meta said the bill's implementation led to the recognition of a valuation allowance against its US federal deferred tax assets, reflecting the impact of the US Corporate Alternative Minimum Tax.

"As a result, the third quarter 2025 provision for income taxes includes a one-time, non-cash income tax charge of USD15.93 billion," Meta said.

Excluding the one-time charge, its third quarter effective tax rate would have decreased by 73 percentage points to 14%, compared to the reported 87%.

Net income would have increased by USD15.93 billion to USD18.64 billion, compared to the reported USD2.71 billion.

Diluted EPS would have increased by USD6.20 to USD7.25, compared to the reported USD1.05.

In other measures, family daily active people was 3.54 billion on average for September 2025, up 8% year-over-year.

In the quarter, Ad impressions delivered across its Family of Apps increased 14%. Average price per ad increased by 10% year-over-year.

Capital expenditures climbed to USD19.37 billion from USD9.20 billion a year ago.

Meta expects fourth quarter revenue of USD56 billion to USD59 billion, compared to USD48.39 in the 2024 period.

For 2025, it has raised its total expenses outlook between USD116 and USD118 billion, from USD114 to USD118 billion previously.

2025 capital expenditures of USD70 billion to USD72 billion are expected, up from the prior outlook of USD66 billion to USD72 billion.

Looking ahead, Meta said it has "continued runway to improve our core services today as well as the opportunity to build new AI-powered experiences and services that will transform how people engage with our products in the future."

Meta called infrastructure capacity a "central requirement" to meeting AI demand, and said its "compute needs have continued to expand meaningfully, including versus our expectations last quarter."

"We are still working through our capacity plans for next year, but we expect to invest aggressively to meet these needs both by building our own infrastructure and contracting with third party cloud providers," Meta added.

As a result, Meta expects capital expenditures dollar growth to be "notably larger in 2026 than 2025" and that total expenses will grow "at a significantly faster percentage rate in 2026 than 2025, with growth driven primarily by infrastructure costs, including incremental cloud expenses and depreciation."

It expects employee compensation costs to be the second-largest contributor to the growth, given new hirings of AI talent and technical talent in priority areas.