Meta’s third-quarter 2025 earnings are making waves, as the social media giant posted $51.24 billion in revenue, up 26% year-over-year, thanks to expanding user engagement and ad sales across its apps.
But a $15.93 billion one-time tax charge, triggered by President Donald Trump’s One Big Beautiful Bill Act, turned profits down to $2.71 billion and earnings per share down to $1.05. Without that hit, Meta says EPS would have been $7.25.
Wall Street acted quickly, sinking Meta’s stock by as much as 9% after hours on Wednesday (October 29) amid concerns surrounding the company’s impending expenses.
The company raised its full-year spending forecast to $116–118 billion and now expects $70–72 billion in capital expenditures next year, in what CEO Mark Zuckerberg calls “the most exciting period in our history.”
Goodbye metaverse, hello machine intelligence
As always, we can attribute this excitement to AI. After Meta’s costly virtual reality experiment, the metaverse, it is turning to AI as a hopefully-profitable distraction. Already, the company has invested $14.3 billion in Scale AI, begun building a $1.5 billion data center in El Paso, Texas, and signed a $27 billion financing deal with Blue Owl Capital for its Hyperion data campus in Louisiana.
Former Metaverse chief Vishal Shah now leads Meta’s AI product strategy under Nat Friedman, another indication that the company is shifting from its VR ambitions to new ventures. Now, Meta’s Reality Labs is being retooled around AI-powered hardware, primarily smart glasses.
AI glasses take the main stage
Reality Labs still reported a $4.4 billion loss in the quarter, but its latest product, the $799 Ray-Ban Meta Display glasses, surprisingly sold out shortly after launch. The glasses are equipped with built-in displays and a neural wristband, marking Meta’s first significant move toward turning AI into social and wearable devices. According to Zuckerberg, manufacturing is already escalating to meet demand.
Meta is also layering AI into its software ecosystem, with its Meta AI app recently introducing Vibes, a feed of AI-generated videos. The move has boosted downloads 56% month-to-month, indicating strong user interest in AI generative content.
Pivoting to a more intelligent tomorrow
With billions flowing into infrastructure and talent, Zuckerberg is trying to communicate to investors that Meta’s future success depends on AI. If the company is lucky, the shift from virtual worlds to intelligent experiences will define the next era of social technology, despite what Wall Street predicts.
Meta is introducing a new set of parental controls to help parents manage how their teenagers interact with AI chatbots across its platforms.