Meta told investors on Wednesday (Oct. 29) to brace for a step-up in infrastructure spending next year as it races to build what CEO Mark Zuckerberg calls “personal superintelligence.”
CFO Susan Lee said the company now expects capital-expenditure dollar growth to be “notably larger in 2026 than 2025,” and total expenses to grow at a “significantly faster” rate next year.
The biggest driver of those expenses will be compute — both company‑owned data centers and third‑party cloud — followed by compensation for artificial intelligence (AI) talent. Lee’s written outlook in the earnings release echoed her message to analysts during the company’s Q3 earnings call, noting expanding compute needs and “further upward pressure” on capital expenditures as Meta finalizes 2026 capacity plans.
“I am very focused on establishing Meta as the leading frontier AI lab, building personal superintelligence for everyone,” Zuckerberg told analysts, adding that the company is “aggressively front‑loading” capacity so it’s prepared if milestones arrive sooner than expected.
Zuckerberg framed the spend as both offense and insurance. If frontier breakthroughs take longer, the company will use additional compute to improve recommendations and ads, areas he said remain “compute‑starved.” He also outlined how Meta plans to unify the “three giant transformers” that power Facebook, Instagram and ads into a single AI system to make trillions of daily recommendations across the apps.
Evidence of AI traction showed up across usage and monetization metrics. More than a billion people use Meta AI monthly, Zuckerberg said, and usage rises as models improve. End‑to‑end automated ad tools are now running at a $60 billion annualized revenue pace, while Reels has crossed a $50 billion run‑rate as AI ranking lifts engagement. Lee added that Meta continues consolidating scores of specialized ads models into larger, more capable architectures, yielding measurable lifts in conversions and ad quality.
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What else stood out on the call:
- New AI products and creation tools. Meta launched Vibes, calling it the next generation of AI creation features. Management said retention looks good and usage is growing week over week. People have generated more than 20 billion images with Meta’s tools, and media creation in the app rose more than 10x after Vibes launched.
- Engagement levels. Instagram video time spent is up more than 30% year over year; Threads surpassed 150 million daily actives, with recent ranking tweaks driving a 10% boost in time spent.
- Reality Labs and smart glasses. Q3 Reality Labs revenue was $470 million, up 74%, helped by retail stock‑ups for Quest and strong AI glasses sales; management expects lower Reality Labs revenue in Q4 due to lapping last year’s Quest 3S launch and earlier channel fills. New Ray‑Ban Meta display glasses sold out in most stores within 48 hours of launch, with demo slots booked through next month.
Meta reported Q3 revenue of $51.24 billion, up 26% year over year, with ad impressions up 14% and average price per ad up 10%. Family daily active people reached 3.54 billion, up 8%. A one‑time, non‑cash tax charge tied to U.S. tax law changes pushed the effective tax rate to 87% and reduced GAAP net income to $2.71 billion (EPS $1.05); excluding that charge, EPS would have been $7.25.
On the product side, Instagram crossed 3 billion monthly actives, Threads continued to build momentum, and management reiterated plans to plug its next frontier model — now being trained inside Meta Superintelligence Labs — into Meta AI and business AI to deepen engagement and open new revenue streams.
The strategic through‑line: AI is already lifting engagement and ad performance, but Meta’s bet is that more compute today, even at the cost of higher 2026 capex, positions the company for the next wave of assistants, content formats and devices as “superintelligence” moves from research into products used by billions.
