Meta Platforms (META) shares fell 6.6% midday Thursday, Oct. 22, despite beating Wall Street’s third-quarter revenue expectations and receiving a wave of price target increases from analysts.
The decline came as investors grew concerned about the social media giant’s aggressive spending on artificial intelligence.
The selloff extended beyond Meta. Intel (INTC) and Advanced Micro Devices (AMD) dropped about 6% and 7%, respectively, while Nvidia (NVDA) fell more than 4%. All other Magnificent Seven stocks fell.
CoreWeave (CRWV), the AI cloud provider whose debt-heavy balance sheet partly led the tech sell-off last week, also declined nearly 4%.
Tech stocks have become sensitive to headlines, with even strong earnings reports triggering sell-offs as investors grow more concerned about AI risks.
Meta rolled out Muse in September, a personal AI agent that can take actions on users’ behalf and help with daily tasks such as sending emails.
Meta beats Q3 revenue estimates, lifts AI spending
Meta reported third-quarter revenue of $64.6 billion, beating analysts’ expectations of $63.41 billion.
Earnings came in at $3.83 per share, below the consensus estimate of $5.46, largely due to a $9.89 billion legal charge related to a settlement over teen mental health and social media.
Excluding the charge, Meta said earnings would have been $7.40 per share, while operating income would have reached $22.88 billion instead of the reported $12.99 billion.
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The company also issued an upbeat fourth-quarter revenue forecast of $73 billion to $76 billion, compared with Wall Street’s estimate of $73.75 billion.
Perhaps what’s rattling investors is that Meta lifted the lower end of its 2026 capital expenditure forecast to $135 billion to $145 billion from a previous range of $130 billion to $145 billion.
It also raised its full-year expense outlook to $175 billion to $179 billion.
“Our AI investments are already delivering substantial incremental advertising revenue through stronger engagement, better recommendations, and more efficient monetization,” the company said in a statement.
Meta is pushing deeper into AI agents. In September, it launched Muse, a personal AI agent that can take actions on users’ behalf and help with daily tasks such as sending emails. The app has become one of the most popular personal AI agents since its debut.
Meta expects strong revenue growth to continue through 2027, although it has not provided a full-year revenue forecast. Still, Meta warned that returns from its newer AI initiatives will take longer to materialize than those from its core advertising business.
Wall Street analysts reset Meta stock price targets
At least 15 analysts raised their price targets on Meta following its earnings report, according to The Fly.
JPMorgan analyst Doug Anmuth raised his price target to $940 from $920 and maintained an Overweight rating.
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The firm pointed to Meta’s strong advertising business, supported by AI-driven improvements and video growth. JPMorgan also sees early momentum in Muse and enterprise products such as Meta Model API and Muse Code.
UBS also raised its price target to $892 from $884 while maintaining a Buy rating.
The firm said Meta’s AI investments are beginning to improve advertising performance and product adoption. Faster monetization of Muse could provide additional upside to revenue forecasts for 2027 and 2028.
However, not all analysts became more bullish on Meta stock.
Wells Fargo analyst Ken Gawrelski lowered his price target to $995 from $1,000 while maintaining an Overweight rating.
The firm acknowledged Meta’s strong advertising performance but flagged uncertainty over the timing and size of potential capital raising, along with its 2027 operating expense and capital expenditure plans.
Meta stock traded at $651.47 as of writing, down 1.35% year-to-date. The S&P 500 Index gained 12% over the same period.
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