Meta falls 3% as Muse growth meets rising AI costs

Meta Platforms shares fell about 3% in premarket trading on Thursday, October 22, as investors weighed growth in its AI agent business against the cost of expanding its computing infrastructure, Economic Times Markets reported. The decline came despite quarterly revenue beating expectations and a fourth-quarter sales forecast above Wall Street estimates.

The stock had gained more than 5% this year. If the reported losses held, roughly $50 billion would be wiped from Meta’s market value. Those figures reflect a premarket snapshot, not a closing result.

Muse adoption faces a spending test

Meta highlighted rapid adoption of Muse, its new AI agent app, alongside its stronger revenue performance. But its annual capital expenditure forecast stood at $135 billion to $145 billion, underscoring the scale of the investment behind its AI ambitions.

The company also reported a third-quarter free cash flow deficit of $2.12 billion, against positive free cash flow a year earlier. The capital expenditure range is a forecast, rather than a measure of spending already completed.

Deutsche Bank analyst Benjamin Black offered a more favourable assessment of the investment programme. He said AI spending was improving advertising performance and engagement, encouraging investors to see computing infrastructure as an asset capable of generating revenue rather than simply an expense.

At least 13 brokerages raised their price targets after the results, according to LSEG data cited in the report. Those revisions contrasted with the stock’s initial negative reaction.

Privacy ruling and a new share class

The earnings release followed a reported ruling by a New Mexico judge ordering Meta to pay a $25 billion penalty in a data-privacy case connected to Cambridge Analytica. Meta said it planned to appeal. The penalty is therefore a reported court order facing a planned challenge, not a completed payment.

Meta also announced plans for non-voting Class C shares. The proposed class would give it additional flexibility to fund acquisitions and compensate employees while preserving chief executive Mark Zuckerberg’s voting control.