Meta Platforms shares dropped 7% on Thursday, erasing the 7% after-hours gain that followed Wednesday’s third-quarter earnings report, even as revenue rose 26% year over year to $64.6 billion. Advertising revenue accounted for $63.06 billion, and Meta issued fourth-quarter revenue guidance of $73 billion to $76 billion. More than 10 million users in the United States and Canada set up Muse agents in the six weeks after launch, making the personal AI assistant the headline story of the earnings call.
Investor sentiment shifted after Meta said it would add a new class of nonvoting shares. CFO Susan Li said the move would expand funding tools and give flexibility to invest behind unprecedented momentum driven by AI. The company also raised its full-year 2026 capital spending forecast to between $135 billion and $145 billion and reported $34.91 billion in quarterly capital expenditures. Free cash flow turned negative, and credit markets responded as the cost of insurance on Meta’s bonds rose to record highs.
Meta also confirmed on October 23 that it acquired Sundial, an AI-powered data analytics startup, for an undisclosed price. Sundial will stop serving outside customers once the deal closes. Co-founders Julie Zhuo and Chandra Narayanan, both former Meta employees, will join Meta, and the startup will fold into the company’s DATA unit led by chief data officer Alex Schultz. Sundial had raised $23 million and counted OpenAI among its clients, though the future of that relationship remains unclear.
Analysts lifted the average one-year Meta price target from $819 to $838, according to Bloomberg data, implying roughly 20% upside from Wednesday’s close. Nvidia CEO Jensen Huang told CNBC that demand for capital is much greater than supply and predicted that imbalance would be solved. Microsoft, Alphabet and Amazon are scheduled to report earnings next week, putting AI spending back in focus.
