Meta earnings land on Wednesday, October 21, after the market closes, and the line many investors will care about most isn’t revenue. It’s how much Meta plans to spend on AI. According to Kiplinger’s earnings calendar, which labels its dates tentative, analysts expect earnings of $5.94 a share on about $63.35 billion in revenue. Against a company that grew sales 28 percent last quarter and still saw profit fall, the debate is whether the spending is paying off.
This preview of the Meta earnings report covers what the company said last quarter, the guidance it set for this one, and the figures that will tell you whether the AI bet is holding up.
What Meta said last quarter
Meta’s second-quarter results, which the company posted on its investor site, were a study in contrasts. Revenue rose 28 percent to $60.80 billion. Net income fell 14 percent to $15.85 billion, and diluted earnings dropped to $6.18 a share from $7.14. The operating margin slid to 31 percent from 43 percent a year earlier.
The reason is cost. Total costs and expenses jumped 55 percent to $42.03 billion, and that figure included $2.40 billion in charges for legal proceedings and $1.18 billion in severance. Together those two items come to roughly $3.6 billion, which helps explain why the quarter looked weaker than the sales growth suggests. Even so, costs grew almost twice as fast as revenue.
The guidance Wall Street is measuring against
For this quarter, Meta told investors to expect revenue of $61 billion to $64 billion. The $63.35 billion analyst estimate sits in the upper half of that range, so the bar is higher than the midpoint implies. By our arithmetic, the guidance implies revenue anywhere from roughly flat to up about 5 percent from the second quarter’s $60.80 billion, and the analyst estimate would be up about 4 percent.
For the full year, Meta expects total expenses of $165 billion to $169 billion, and capital expenditures of $130 billion to $145 billion, including principal payments on finance leases. In its second-quarter release, Meta narrowed the capex range from $125 billion to $145 billion by lifting the bottom end.
Capex is the key figure. Meta spent $31.08 billion on it in the second quarter alone, which works out to about 51 percent of that quarter’s revenue. Money like that typically goes into data centers, servers and chips, and the bill arrives before any revenue from it does.
Five things to watch in the Meta earnings report
First, the top line. Say revenue comes in inside the guided range but below $63 billion. Meta would have hit its own forecast and still fallen short of what analysts want, and the stock could react to that gap. A number near the top of the range would suggest advertisers haven’t pulled back.
Second, ad health. In the second quarter, ad impressions rose 14 percent and the average price per ad rose 12 percent. Both rising at once is a good sign, because it means Meta is showing more ads and charging more for each. A slowdown in either would be worth noting.
Third, capex. Does the full-year range move again? Does Meta say anything about 2027? A bigger number isn’t bad news on its own, but it puts more weight on revenue to keep up.
Fourth, margins. The operating margin fell from 43 percent to 31 percent in a year. Investors will want to see whether this quarter’s margin looks closer to the 31 percent or whether the legal and severance charges were a one-quarter distortion. Meta’s expense guidance gives some clues, but not a precise answer.
Fifth, buybacks and headcount. Meta bought back no shares in the second quarter, against $10.17 billion a year earlier, and had 75,472 employees, down 1 percent. Investors may read the missing buybacks as cash being kept for capex.
Users, Reality Labs and the rest
Two other lines belong on the Meta earnings checklist. Family daily active people, the measure of users across Meta’s apps, averaged 3.60 billion in June, up 3 percent. Growth that slow is expected for an audience that large, but it means ad growth depends more on pricing and engagement. Reality Labs, the unit behind Meta’s headsets and smart glasses, lost $4.62 billion in the quarter, compared with $4.53 billion a year earlier. The loss is roughly flat from a year ago.
Other reports the same week
Meta isn’t alone on the calendar. Netflix reports Tuesday, October 20, and Tesla also reports on October 21, according to Kiplinger. Netflix is worth a look next to the Meta earnings because it also just cut staff while its business grew, as our earlier report on the Netflix layoffs described.
Why this matters outside Wall Street
Meta isn’t the only company telling investors that AI is expensive. Nasdaq stocks have swung on that worry, as our report on the AI stock selloff and Nasdaq’s worst week covered. Meta earned $15.85 billion last quarter, so it has room to absorb heavy spending. The question is how long investors will wait for returns. Meta’s capital spending is also read as a signal about demand for chips and data-center equipment, so the Meta earnings numbers can move other stocks too. This article is general information, not investment advice, and the estimates above can change before the report.
What to watch after the Meta earnings
After Wednesday, listen for two things: what Meta says about 2027 spending, and whether its expense forecast changes. Another capex increase alongside cooler revenue growth would raise louder questions about the payoff. Revenue near the top of its range would make the spending easier to defend. Even a hint of a bigger 2027 budget could shape the reaction on its own.
Editor’s take
Here’s a shortcut for reading the Meta earnings report: skip the headline EPS and compare how fast revenue is growing with how much Meta is spending on capex. Revenue grew 28 percent last quarter, and capex ran above $31 billion. As long as sales keep growing fast enough to justify that spending, the AI story holds together. If growth cools while capex climbs, strong ad pricing won’t make the numbers feel comfortable.
