Meta Platforms Inc. shares declined by as much as 9% following the release of its third-quarter 2025 earnings report. The company posted results that surpassed analyst expectations in both revenue and earnings per share but was weighed down by a substantial one-time tax charge. For Q3, Meta reported adjusted earnings per share (EPS) of $7.25, exceeding the $6.69 consensus estimate. Revenue came in at $51.24 billion, surpassing the anticipated $49.41 billion. This revenue figure represents a robust 26% year-over-year increase, marking the fastest growth rate since the first quarter of 2024.
Meta recorded a non-cash, one-time income tax charge of $15.93 billion, attributed to the implementation of President Donald Trump’s One Big Beautiful Bill Act. Despite this charge, the company anticipates a significant reduction in U.S. federal cash tax payments for the remainder of 2025 and future years as a result of the legislation.
Updated Financial Guidance and Rising Expenses
Meta raised its fourth-quarter revenue guidance to a range between $56 billion and $59 billion, with the midpoint exceeding Wall Street expectations. Concurrently, the company increased the low end of its total expense forecast for 2025 to $116 billion–$118 billion, up from the previous range of $114 billion–$118 billion. CEO Mark Zuckerberg emphasized that the growing investments in artificial intelligence (AI) require additional computing power, leading to higher costs for data centers and cloud services. He expressed confidence that these increased expenditures will be profitable over time.
Capital Expenditure Outlook
Meta also raised its capital expenditure guidance for 2025 to a range of $70 billion to $72 billion, up from the previous $66 billion to $72 billion forecast. This reflects the company’s commitment to expanding infrastructure to support its AI ambitions.
Reality Labs Posts Significant Loss
The Reality Labs division, responsible for Meta’s hardware products, reported a $4.4 billion loss on $470 million in revenue for the quarter. The company anticipates that Reality Labs revenue in Q4 2025 will decline compared to the same period last year, citing the absence of a new VR headset launch and early holiday season inventory purchases during Q3. Despite these headwinds, Meta expects strong year-over-year growth in AI glasses revenue, driven by demand for recently introduced products such as the $799 Meta Ray-Ban Display glasses. CEO Zuckerberg noted that the product is sold out with demo appointments booked through November, indicating robust consumer interest.
User Engagement and Advertising Revenue
Meta reported 3.54 billion daily active users across its platforms in Q3, slightly surpassing analyst expectations of 3.5 billion. Advertising revenue reached $50.08 billion, also beating the $48.5 billion estimate. This sustained ad revenue growth underscores Meta’s continued dominance in digital advertising.
AI Initiatives and Workforce Updates
Meta has intensified its AI investments throughout 2025, including a major organizational restructuring following the underwhelming launch of its open-source Llama 4 software in April. The company recently announced layoffs of approximately 600 employees in its Superintelligence Labs AI unit, while preserving its top-tier TBD Labs. Additionally, Meta entered a $27 billion joint venture with Blue Owl Capital to develop a large data center in Richland Parish, Louisiana, further supporting its AI infrastructure expansion. As of September 30, Meta’s global workforce totaled 78,450 employees, reflecting an 8% increase year-over-year.
In September, Meta launched “Vibes,” an AI-generated video feed within its Meta AI app. This feature has spurred a 56% month-over-month increase in app downloads, reaching 3.9 million as of October 18, according to mobile analytics firm Appfigures.
“Vibes is an example of a new content type enabled by AI, and I think that there are more opportunities to build many more novel types of content ahead,” said Mark Zuckerberg.
FinOracleAI — Market View
Meta’s Q3 2025 earnings illustrate a complex picture: strong top-line growth and user engagement contrast with significant one-time tax charges and rising operational costs driven by AI investments. The company’s elevated capital expenditures and expense outlook reflect a strategic pivot toward long-term AI infrastructure and hardware development.
- Opportunities: Accelerated AI adoption could unlock new revenue streams and enhance user engagement through innovative products like AI glasses and Meta AI app features.
- Risks: Heavy investment in AI infrastructure and Reality Labs hardware losses may pressure near-term profitability and cash flow.
- Tax Impact: The one-time $15.93 billion tax charge is non-cash, with expected reductions in future federal tax payments improving cash flow outlook over time.
- User Metrics: Continued growth in daily active users supports sustainable advertising revenue expansion.
- Competitive Landscape: Meta’s ability to monetize AI innovations and manage costs amid increasing competition will be critical to maintaining market leadership.
Impact: Meta’s Q3 results and forward guidance reflect a company investing aggressively in AI and hardware to secure long-term growth, despite short-term earnings pressure from tax and expense increases. Investors should monitor execution on AI initiatives and cost management closely.
