Meta Platforms posted stronger-than-expected revenue for the third quarter of 2026, but a sharp drop in operating income tied to its runaway artificial-intelligence spending overshadowed the beat, dragging the stock lower in the earnings reaction.

The company reported quarterly revenue of $64.6 billion, up 26% from a year earlier and above the $61 billion-to-$64 billion range Meta itself had guided Wall Street toward over the summer. Advertising revenue drove the increase, with the company pointing to growth in ad impressions and pricing across Facebook, Instagram and Threads.

Profits squeezed by AI buildout

The headline number investors zeroed in on was profitability, not sales. Income from operations fell to $12.99 billion, a drop of roughly $7.55 billion — about 37% — from the same quarter last year, which Meta attributed to sharply higher costs and expenses as it keeps pouring money into data centers, custom chips and AI talent. The quarter extends a pattern from earlier this year: Meta's second-quarter operating profit had already come in below Wall Street's expectations as capital spending climbed past $31 billion, a figure that left the company with barely $784 million in free cash flow for that period.

Shares fell more than 6% in reaction to the results, according to market coverage of the report, even as the company separately moved forward with plans for its first-ever stock split — a step Meta has never taken since going public in 2012, even as its share price climbed into the hundreds of dollars and its market capitalization swelled past $1.8 trillion.

Meta's own regulatory 10-Q filing with the Securities and Exchange Commission confirms the revenue and operating-income figures, describing the profit decline as driven by "an increase in costs and expenses" during the quarter.

META STOCK DROPS MORE THAN 6% DESPITE A STRONG Q3 BEAT, AS WALL STREET FOCUSES ON THE COST OF ITS AI BUILDOUT.

Part of a bigger AI-trade wobble

Meta's report landed in the middle of a rocky stretch for AI-linked megacap stocks. Chip and technology shares broadly slid this week on concerns that the enormous capital outlays tech giants are making on AI infrastructure won't pay off as quickly as investors had hoped, with one tracked selloff wiping roughly $2.6 trillion off chipmaker valuations before shares began stabilizing. Bitcoin and other risk assets also pulled back as investors rotated away from speculative bets.

Meta isn't alone in grappling with the tension between AI ambition and near-term profitability. Rivals reporting around the same window delivered a mixed picture: Tesla beat earnings estimates but saw net income tumble 43% on its own AI-related spending surge, while networking-gear maker Nokia saw profit rise on AI-driven demand even as its stock fell roughly 10% on a cautious outlook.

What's next

Meta executives have signaled capital spending will stay elevated well into 2027 as the company races to build out data-center capacity for its AI models and the Reality Labs division. Investors will be watching the fourth-quarter guidance call and any further detail on the mechanics and timing of the proposed stock split, which would make shares more accessible to retail investors but does not change the underlying value of the company.