Meta’s Profit Rises 35%, Even as Spending Spree Continues

For the last few years, Meta has faced criticism from investors for spending on future-facing projects like artificial intelligence, chatbots and the metaverse.

Now Meta wants everyone to know that at least some of those investments are starting to pay off.

On Wednesday, the Silicon Valley company reported double-digit revenue and profit growth for the third quarter, driven largely by advancements in its systems for advertisement targeting and suggesting relevant posts and videos to users. The improvements came from its continued investments in artificial intelligence, the company said.

Revenue was $40.6 billion, up 19 percent from a year earlier and above Wall Street estimates of $40.2 billion, according to data compiled by FactSet, a market analysis firm. Profit was $15.7 billion, up 35 percent from $11.6 billion a year earlier.

But Meta also said it would continue a huge spending spree that has spooked Wall Street. The company said it spent $23.2 billion on costs and expenses and $9.2 billion in capital expenditures in the third quarter, including on computing infrastructure for A.I., building the immersive world of the metaverse and other expenses. It also raised its annual spending forecast to $38 billion to $40 billion, up from the $37 billion to $40 billion it had projected in July.

The company said it anticipates a “significant acceleration in infrastructure expense growth” in 2025, as it continues to invest in building new data centers and other A.I.-related costs.

Shares of Meta fell more than 2 percent in after-hours trading, after closing at $591.80.

The third quarter figures underscored how Meta’s digital advertising business continues to buttress its extravagant spending. Executives have said its huge investments in A.I. and the metaverse will improve all of its services. The company has raised its spending forecast several times this year.

“Meta is firing on all cylinders and A.I. is clearly driving growth,” said Jesse Cohen, a senior analyst at Investing.com. “With that being said, investors appear to be disappointed about the company’s forward guidance and the rising costs needed to develop A.I. features.”

Meta has shown some fruits of its investments in recent weeks. It introduced a new virtual reality headset and a set of augmented reality glasses with holograph technology built into the lenses. It also added enhancements to its A.I. assistant and unveiled a set of A.I. tools for automatically generating videos, instantly editing them and synchronizing them with A.I.-generated sound effects, ambient noise and background music.

Some of the investments have yielded unexpected hits. Sales of Meta’s Ray-Ban smart glasses, which allow people to take photos, video and listen to music through the frames, have exceeded expectations and have been in demand at Ray-Ban retail stores across Europe, the company has said.

Other tech giants have also spent billions on A.I. On Tuesday, Alphabet, the parent company of Google, said it spent $13 billion on capital expenditures in the third quarter — including large investments in data centers and chips to power A.I. — which was up 62 percent from a year earlier.

“We had a good quarter, driven by A.I. progress across our apps in business,” Mark Zuckerberg, Meta’s chief executive, said in a statement. The company said more than 3.29 billion people use one or more of Meta’s apps, which include Facebook, Instagram and WhatsApp, every day.

Mike Isaac is a technology correspondent for The Times based in San Francisco. He regularly covers Facebook and Silicon Valley. More about Mike Isaac