Meta Shares Plunge as AI Spending Plan Rattles Investors

Wall Street delivered a harsh verdict on Meta's latest earnings report, sending shares tumbling more than 11% despite the company posting record-breaking revenue. The dramatic sell-off represents one of the most significant single-day declines for the social media giant in three years, triggered by CEO Mark Zuckerberg's announcement of massive artificial intelligence investments scheduled for 2026.

Meta's third-quarter financial results presented a complex picture. The company achieved $51.24 billion in revenue, representing a substantial 26% year-over-year increase that comfortably exceeded market expectations. The advertising business demonstrated remarkable strength, with ad impressions climbing 14% while average ad prices rose 10%. User engagement remained robust across Meta's platforms, serving 3.54 billion people daily.

However, investor attention quickly shifted from these positive metrics to a massive $15.93 billion tax provision that dramatically compressed earnings per share to just $1.05—far below the $6.70 analysts had projected. While excluding this one-time tax effect would have shown a healthier $7.25 per share profit, the damage to market sentiment was already done.

Aggressive Investment Timeline Sparks Investor Anxiety

The true catalyst for the market's negative reaction emerged from Meta's forward-looking guidance. Chief Financial Officer Susan Li outlined plans for "aggressive investments" accelerating into 2026, with expenditures growing notably faster than 2025 levels and capital spending rising "significantly." For 2025 alone, Meta has budgeted $70 to $72 billion in investments, primarily directed toward AI infrastructure, data center expansion, and enhanced cloud computing capabilities.

Should investors sell immediately? Or is it worth buying Meta?

Zuckerberg defended this strategic direction as essential preparation for achieving "superintelligence" and navigating what he termed a "generational paradigm shift." Yet investors heard echoes of the company's costly Metaverse venture, where Meta's Reality Labs division burned through billions, including a $4.4 billion loss just in the third quarter.

Divided Analyst Perspectives Emerge

Financial experts offered conflicting interpretations of Meta's situation. Oppenheimer downgraded the company's rating from "Outperform" to "Perform," citing concerns about uncertain returns from AI expenditures. Meanwhile, other market strategists viewed the sharp price decline as an overreaction that could present buying opportunities for investors with longer time horizons.

Looking ahead, Meta provided fourth-quarter revenue guidance ranging between $56 and $59 billion. The critical question facing investors is whether Zuckerberg's expensive artificial intelligence gamble will ultimately pay off—or whether history will repeat itself with another massive investment in the wrong technological future.