Meta tops Q3 revenue and profit estimates but $9.9B legal fee lifts expense forecast

Investors face a key contrast: a clear revenue beat versus a significant operating profit shortfall. Market response will probably depend on whether the miss is seen as mainly a one-time legal expense or evidence of permanently higher spending. The fourth-quarter revenue forecast, whose midpoint exceeds analyst estimates, suggests advertising demand stays strong as the holiday season approaches. A raised minimum capital expenditure level cements Meta's position as one of the biggest investors in AI infrastructure. This could influence market sentiment across large-cap tech stocks and AI hardware providers. Until Meta explains its plans, the new non-voting stock structure will probably prompt governance concerns.

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Meta's advertising business posted another earnings beat, yet a $9.9 billion legal cost and an expanding spending program made what was a solid revenue quarter a more mixed outcome.

Key results:

• Earnings per share for the third quarter hit $3.83, topping the $3.57 consensus, while total revenue reached about $64.6 billion, exceeding the $63.3 billion forecast.
• Advertising sales totaled approximately $63.1 billion, beating the roughly $61.9 billion estimate.
• Operating profit came in at about $13 billion, well below the expected $20.9 billion, and Family of Apps operating income also lagged.
• Reality Labs revenue was roughly $440 million, below the $518 million projection, but its operating loss of approximately $4.1 billion was smaller than the $5.1 billion anticipated.
• Fourth-quarter revenue is forecast at $73 billion to $76 billion, with the midpoint above the $73.6 billion consensus.
• Full-year spending guidance was lifted to $175 billion–$179 billion to account for the $9.9 billion legal charge; capital expenditure guidance was narrowed to $135 billion–$145 billion.
• Meta introduced a new non-voting Class C common stock.
• The company did not provide a fiscal 2027 revenue outlook.

Meta Platforms posted Q3 2026 earnings and revenue that exceeded analyst estimates, fueled by ongoing advertising momentum. But operating profit missed projections sharply, and the firm boosted its full-year spending forecast to include roughly $9.9 billion in legal costs.

Per-share earnings landed at $3.83, versus the $3.57 analyst average. Total revenue increased to roughly $64.6 billion, ahead of the $63.3 billion estimate. Advertising revenue, the company's main sales driver, reached about $63.1 billion, topping the $61.9 billion projection. Family of Apps, which includes Facebook, Instagram and WhatsApp, posted revenue of about $64.2 billion, above the $62.8 billion consensus.

The profit picture was less rosy. Operating profit of roughly $13 billion fell far short of the $20.9 billion analysts expected, and Family of Apps operating income of about $17.1 billion missed the $23.3 billion forecast.

At Reality Labs, the unit focused on virtual and augmented reality devices, revenue of roughly $440 million missed the $518 million estimate. However, the division's operating loss of about $4.1 billion was less than the $5.1 billion loss anticipated.

Meta stated it now projects full-year total costs of $175 billion to $179 billion, compared with the earlier $165 billion to $169 billion range. The updated forecast includes the $9.9 billion legal charge, which explains roughly the $10 billion increase at both ends. Capital spending guidance was tightened to $135 billion–$145 billion from $130 billion–$145 billion, lifting the lower bound.

For Q4, Meta forecast revenue of $73 billion to $76 billion. The range's midpoint is above the $73.6 billion analyst consensus.

The company also announced a new non-voting Class C common stock, with no additional details in its preliminary results. Focus will likely shift to how Meta intends to use the new shares, and whether the operating miss stems mainly from a one-time legal expense or from a broader increase in spending as it pushes forward with AI investments. I suspect proceeds from stock sales of this class will go toward funding AI spending without diluting Mr. Zuck's control of the firm.