Meta’s revenue surges to $64.6 billion, but billions in settlements and skyrocketing AI spending turn screws on profit, free cash flow

Mark Zuckerberg’s Meta Platforms said Wednesday that third-quarter revenue rose 26% to $64.6 billion, above the $63.3 billion analysts expected, according to Visible Alpha consensus from S&P Global Market Intelligence.

Meta reported net income of $9.9 billion, or $3.83 a share, versus $2.7 billion, or $1.05 a share in the year-ago period.

Operating income, profit from its core business, fell to $13 billion $20.5 billion a year ago, against the $16.9 billion analysts expected.

Operating margin also got squeezed, moving to 20% from 31% last quarter and 40% a year ago.

Hours before the results, news broke that a New Mexico judge ordered the company to pay $25 billion in penalties related to the Cambridge Analytica data privacy scandal.

A jury previously found more than 43 million violations, which meant Meta’s penalty could have been nearly $220 billion.

Meta plans to appeal.

The results also come a week after Meta’s Superintelligence Labs launched Muse Wonder to the public, its first frontier model .

Meanwhile, Q3 included a charge from a separate $10 billion settlement Meta struck with a group of attorneys general over youth safety.

The terms of the settlement will see Meta pay about $18 billion to the states over the next decade, depending on cooperation from TikTok and Google’s YouTube.

Without the charge, operating income would have been $22.9 billion and earnings of $7.40 a share, rather than $13 billion and $3.83.

Capital expenditures, which have tech investors on tenterhooks, clocked in at $34.9 billion, compared to $31 billion in the second quarter and $19.4 billion a year ago.

Meta slightly tweaked its full year capex guidance to $135 billion to $145 billion, from $130 billion to $145 billion.

Melissa Otto, global head of Visible Alpha research at S&P Global, wrote in a note before the results that consensus capex for 2026 had risen more than $14 billion since April to about $140 billion—almost double 2025.