Meta's Revenue Rose 26% Last Quarter, But AI Spending and Legal Charges Hit Profit

Meta Platforms reported third-quarter 2026 results on October 21, posting revenue of $64.6 billion, up 26 percent from a year earlier and above the $61 to $64 billion range the company had guided to in July. The figure also topped Wall Street's roughly $63.3 billion consensus estimate, according to multiple outlets covering the release.

The strong top line was overshadowed by a $9.89 billion legal charge tied to Meta's August 2026 settlement with a bipartisan group of 52 state attorneys general, who had accused the company of designing Facebook and Instagram to be addictive to teenagers. The charge pulled diluted earnings per share down to $3.83 for the quarter, even as the underlying business kept growing.

Capital expenditures, including finance lease payments, totaled about $34.9 billion for the quarter as Meta kept building out AI data center capacity. That spending exceeded the roughly $32.8 billion in operating cash flow the company generated over the same period, leaving free cash flow negative for the quarter. Meta narrowed its full-year 2026 capital spending guidance to a range of $135 billion to $145 billion, raising the low end of its prior forecast.

Looking ahead, Meta guided fourth-quarter revenue to a range of $73 billion to $76 billion, suggesting the advertising business is still growing even as AI infrastructure investment weighs on cash flow. The company also said it plans to create a new, non-voting class of publicly listed stock starting in January 2027.

Separately, and coincidentally on the same day as the earnings release, a New Mexico judge ordered Meta to pay the state $25 billion after a jury found the company had misled users about its data privacy and content moderation practices on Facebook. The jury concluded that a large share of the company's public statements on those topics were misleading; the judge reduced a far larger calculated penalty to the $25 billion figure, which would fund the state's education system if upheld. Meta has said it plans to appeal.

Together, the two developments illustrate the financial pressure AI investment and years of privacy and safety litigation are now putting on Meta at the same time, even as its core advertising business keeps outperforming expectations.