Meta Earnings Preview: Can AI Growth Restore Confidence After the Nasdaq Sell-Off?
Author: Daniel Carter
Date: October 18, 2026
Key Takeaways
- Meta is set to report its third-quarter earnings on October 21, with expected revenue around $63.3 billion.
- Investors are keen to see if AI advancements are enhancing Meta's advertising business amidst rising costs.
- Early interest in Meta's Muse AI agent has bolstered growth narratives, but monetization remains uncertain.
- The outlook on capital expenditures will be crucial in determining investor sentiment regarding AI investments.
Overview
Meta Platforms is approaching a critical earnings report that will assess the impact of its significant investments in artificial intelligence (AI) on revenue growth. This comes in the wake of a notable decline in technology stocks, with the Nasdaq Composite dropping 4.5% recently, raising concerns about the profitability of the AI infrastructure boom.
Earnings Expectations
Meta's earnings call is scheduled for October 21 at 4:30 p.m. ET. Analysts predict:
| Metric | Q3 2026 Forecast | Q3 2025 Result | Expected Change |
|---|---|---|---|
| Revenue | $63.3 billion | $51.24 billion | ~24% |
| Earnings per share | $5.60–$5.94 | $1.05 | Over 400% |
| Adjusted operating income | $18.8 billion | $20.5 billion | Lower YoY |
Advertising Growth
Despite the focus on AI, advertising remains the core of Meta's revenue. In Q2, revenue rose 28% YoY to $60.8 billion, driven by a 14% increase in advertising impressions and a 12% rise in average ad prices. The upcoming report will reveal if this trend continues amidst economic pressures.
Muse AI Agent
Meta's Muse AI agent, launched in September, aims to transform generative AI into a consumer product. It has garnered millions of downloads and over 2 million daily users. However, the challenge lies in monetizing this interest through potential revenue streams such as subscriptions and enterprise services.
AI Spending Risks
Meta's AI investments are costly, with Q2 expenses rising 55% to $42.03 billion. The company has narrowed its 2026 capital expenditure forecast to between $130 billion and $145 billion. Investors are wary of rising costs without clear paths to revenue generation.
Reality Labs and Additional Pressures
Reality Labs continues to incur significant losses, which could further strain Meta's financials if not offset by strong advertising performance or successful monetization of Muse.
Market Implications
Meta's earnings will precede reports from other tech giants like Alphabet and Microsoft, making it a bellwether for investor sentiment regarding AI investments. A strong performance could stabilize Meta's stock and the broader tech sector, while disappointing results may exacerbate existing concerns.
Conclusion
Meta has the opportunity to demonstrate that its AI investments can yield both immediate profits and long-term growth. However, maintaining cost discipline will be crucial as rising expenditures could overshadow revenue growth. Investors will be looking for signs of resilient advertising growth, user engagement with Muse, and a clear strategy for future returns on infrastructure spending.