Meta’s Q3 Revenue Jumps 26% to $51.2B, Sets Stage for Stock Split
Meta posted Q3 revenue of $51.2 billion, up 26% year-over-year, and adjusted EPS of $7.25, up 20%, driven by 3.5 billion daily users across Facebook, Instagram and Threads. Trading above $600 per share at under 28x forward earnings, Meta is poised for a potential stock split.
1. Meta Reports Strong Q3 Revenue and AI-Driven Earnings Growth
In its third quarter, Meta Platforms delivered revenue of $51.2 billion, up 26% year-over-year, driven by higher average ad prices and increased user engagement on Facebook and Instagram. Adjusted earnings per share rose 20% to $7.25, reflecting both operating leverage from AI-powered content recommendations and continued strength in digital ad demand. Management highlighted that generative AI improvements have boosted time spent per user by 5% on Facebook and 10% on Threads, translating directly into higher ad monetization rates.
2. Scaling Data-Center Capex Fuels Operating Leverage
Meta has committed more than $40 billion in capital expenditures over the past 12 months toward new data-center construction and AI infrastructure, marking the largest capex cycle in the company’s history. Those investments have enabled a 35% year-over-year increase in server capacity dedicated to machine-learning workloads. As AI models become more integrated into product features, Meta expects research and development spending to plateau in 2026, allowing R&D leverage to accelerate operating margins by up to 4 percentage points compared to last year’s level.
3. User Base Expansion and Advertising Market Leadership
Meta’s suite of apps—Facebook, Instagram, WhatsApp, Messenger and Threads—now reaches more than 3.5 billion daily active users globally, up 7% over the past year. This unparalleled reach underpins its position as the world’s second-largest digital advertiser, with global ad revenues exceeding $200 billion in the last four quarters. Industry forecasts project social media ad spending to grow 16% in 2026, positioning Meta to capture a disproportionate share of incremental digital ad dollars thanks to its advanced targeting algorithms and vast first-party data troves.
4. Potential Catalysts and Key Risks for Investors
Investors are eyeing a possible stock-split later this year, as Meta’s share price has more than tripled since late 2022 without any split to improve liquidity for retail holders. Conversely, rapid share price appreciation has drawn valuation concerns: Meta currently trades at a forward multiple below the broader market despite its 26% revenue growth. Additional risks include potential regulatory crackdowns on personalized advertising, a slowdown in ad spending growth if global GDP forecasts deteriorate, and the possibility that competitors launch comparably advanced AI products that erode Meta’s engagement gains.