Meta AI Spending and Muse Adoption Face Earnings Test

Meta is due to report third-quarter results on Wednesday, October 21, with investors watching whether its advertising business and new artificial intelligence products can support a steep rise in infrastructure spending. Economic Times Markets reported that analysts expect revenue to increase 23.8% to $63.42 billion for the September quarter, while net income falls about 17% to $15.44 billion.

The earnings release will also put adoption of Meta’s Muse personal assistant under scrutiny. The subscription-offering assistant and the company’s latest AI models have drawn a positive reception, according to the report, strengthening investor confidence as Meta commits hundreds of billions of dollars to expanding its AI infrastructure.

Spending puts cash generation under pressure

Analysts estimate that quarterly capital expenditure more than doubled to $41.68 billion, according to Visible Alpha data cited in the report. Higher spending had already weighed on free cash flow in the second quarter; analysts now forecast cash burn of $8.52 billion for the third quarter.

Those figures are expectations ahead of the results, not reported outcomes. The forecast decline in net income comes from data compiled by LSEG.

Advertising remains central as Meta pursues AI revenue

Chief executive Mark Zuckerberg is seeking revenue beyond advertising through AI products and services, including offerings aimed at businesses. That effort places Meta in competition with OpenAI and Anthropic, while its advertising operations face pressure from Google and TikTok.

The expected 23.8% revenue increase would represent a slowdown from roughly 28% growth in the previous quarter. Even so, BofA Global Research analysts said their survey indicated healthy advertising demand during the quarter and that recent AI launches had strengthened confidence in Meta’s ability to deliver products.

Morgan Stanley analysts raised their earnings estimates for 2027 and 2028 despite the higher spending outlook, citing stronger advertising growth and the possibility of additional revenue from new AI products. Those longer-term expectations do not yet establish how much revenue Muse or other AI offerings will generate.