Meta expects $135-145 billion capex in 2026 as AI investments expand

Meta projects its 2026 capital expenditures to reach $135-145 billion as it aggressively builds out AI infrastructure. In its Q3 2026 earnings, revenue rose 26% year-on-year to $64.60 billion, propelled by $63.06 billion in ad sales. However, operating margin fell to 20% due to a $9.89 billion legal settlement over teen mental health litigation. Meta highlighted early gains from AI, citing ad monetization boosts and over 2 million daily users for its new Muse AI assistant, while signaling plans to narrow Reality Labs losses to $15 billion in 2027 to prioritize AI investments.

Capital expenditure forecasts and spending

• ▪Meta's full-year 2026 capital expenditure forecast aligns with Wall Street analyst expectations of $139.79 billion
• ▪Meta expects its 2026 capital expenditure to range between $135 billion and $145 billion as it expands AI infrastructure, narrowing its previous guidance of $130-145 billion
• ▪Meta reported capital expenditures of $34.91 billion for the third quarter of 2026, an increase from $31.08 billion in the second quarter

Financial impact of AI investments

• ▪Meta stated that its AI investments are generating incremental advertising revenue through stronger engagement, improved recommendations, and more efficient monetization
• ▪Meta expects its AI investments and new product launches to support company revenue growth throughout 2027

Third-quarter revenue growth

• ▪Meta's third-quarter 2026 advertising revenue rose to $63.06 billion, driven by a 10% increase in ad impressions and a 14% rise in average price per ad
• ▪Meta reported third-quarter 2026 total revenue of $64.60 billion, representing a 26% year-on-year increase

Third-quarter operating performance

• ▪Meta reported an operating income of $12.99 billion for the third quarter of 2026
• ▪Meta reported total costs and expenses of $51.61 billion for the third quarter of 2026, up 68% year-on-year
• ▪Meta reported a third-quarter 2026 operating margin of 20%, down from 40% in the same quarter of 2025

Full-year expense guidance

• ▪Meta's revised 2026 total expense guidance incorporates a $9.9 billion charge related to legal proceedings recognized in the third quarter of 2026
• ▪Meta expects total expenses for 2026 to range from $175 billion to $179 billion

Legal settlement financial impact

• ▪Excluding the $9.89 billion legal settlement charge, Meta's Q3 2026 operating income would have been $22.88 billion rather than the reported $12.99 billion
• ▪Meta recognised a $9.89 billion legal settlement charge in Q3 2026 following an August 2026 agreement with 52 US state attorneys general regarding teen mental health litigation

Muse AI model features and monetization

• ▪Meta launched its first frontier AI models, Muse and Muse Wonder, with Muse reaching over 2 million daily users and 3 million downloads
• ▪Meta CEO Mark Zuckerberg stated at the Connect keynote event in September 2026 that the Muse AI assistant has a novel business model
• ▪CEO Mark Zuckerberg said Meta plans to offer Muse free for a high volume of tokens and monetize the service long-term by collecting transaction fees

Reality Labs loss projections

• ▪Meta expects Reality Labs operating losses to range between $18 billion and $19 billion in 2026
• ▪Meta anticipates Reality Labs operating losses to narrow to around $15 billion in 2027 as it redirects capital toward AI priorities