Meta to report third-quarter earnings after the bell

Meta is set to announce its third-quarter earnings this Wednesday, and all eyes are on potential increases in its artificial intelligence investments. Analysts from LSEG anticipate significant insights from the report following a year of intense AI spending, particularly after a substantial reorganization within the company that followed the lukewarm reception of its Llama 4 software in April. Last week, the tech giant disclosed plans to lay off approximately 600 employees from its Superintelligence Labs AI division, although the high-profile TBD Labs remained untouched. In a strategic move, Meta also announced a joint venture with Blue Owl Capital, valued at $27 billion, aimed at financing the construction of an expansive data center in Louisiana. When Meta released its second-quarter earnings in July, it indicated that its AI expenditures would lead to a higher growth rate in expenses for 2026 compared to the previous year. The company adjusted its 2025 expense outlook, predicting total expenses would range between $114 billion and $118 billion. On Wall Street, expectations are high for Meta to report third-quarter revenue of $49.4 billion, reflecting a robust 22% increase from the previous year. Projections for the full year suggest a 19% rise in overall sales, totaling $196.2 billion. Analysts forecast that advertising revenue for the third quarter will reach $48.5 billion, and the company is expected to report an impressive 3.5 billion daily active users. Investors are particularly interested in the traction of Meta's AI app, which saw a remarkable 56% month-over-month increase in downloads, totaling 3.9 million by mid-October. The launch of the AI-driven Vibes short video tool and social feed on September 25 has contributed to this growth. However, competing app Sora by OpenAI has also gained momentum, achieving 2.6 million downloads on iOS during the same period, compared to Meta AI's 1.1 million. Additionally, there are indications that Meta may be reevaluating its Metaverse strategy. The company announced that Vishal Shah, who previously oversaw metaverse initiatives, will now lead product development for its AI unit. Meanwhile, the Reality Labs division, which focuses on virtual and augmented reality technologies, is projected to incur an operating loss of $5.1 billion while generating $316 million in sales during the third quarter.