Meta lifts 2026 AI spending to $145B, adds nonvoting stock class
What's the deal? Meta raised its 2026 capital-expenditure outlook to between $135 billion and $145 billion and announced a new class of nonvoting Class C stock, deepening its bet on artificial intelligence. It disclosed both moves on October 21 alongside third-quarter results that beat Wall Street estimates.
The numbers: Third-quarter revenue rose 26% to $64.6 billion, topping the $63.3 billion estimate, with earnings of $3.83 a share against a $3.57 forecast. But free cash flow swung to a $2.12 billion deficit, down from positive $10.63 billion a year earlier.
Why the new shares? The nonvoting stock will fund infrastructure, acquisitions, and employee compensation without taking on debt or diluting chief executive officer Mark Zuckerberg's control. Shareholders will receive one new share as a dividend — effectively a two-for-one split — with trading set to begin in January 2027.
Why now? AI outlays are squeezing even cash-rich tech firms. "The scale of investment required to compete, sustain growth, expand infrastructure, and pursue new strategic initiatives amidst the AI transformation taking place in the industry is significant," Meta said.
What's the endgame? Meta is anchoring its consumer push on Muse, its AI agent, which drew more than 10 million users in the US and Canada in six weeks. "Now that Muse has clear product market fit, we are entering a new phase and a more operational phase that is focused on scaling it," Zuckerberg told analysts.
The cost catch: Muse is not yet profitable. "In the near term, Muse is very compute-intensive to run. But we expect to improve its cost efficiency by more than 10x in the next year, which will enable it to be profitable once the revenue lines are at scale," Zuckerberg said on the call, according to Meta's transcript. Chief financial officer Susan Li said Meta expects total serving costs to rise as the user base grows, named better use of off-peak capacity, more efficient models and inference optimisation as the levers, and declined to share Muse's cost structure. Zuckerberg added that compute costs are one reason Muse has so far launched only in the US and Canada.
What could go wrong? Nonvoting shares give investors economic exposure but no say in how Meta is run, insulating management from scrutiny. Wider AI-agent adoption could also heighten privacy worries, said Minda Smiley, senior analyst at Emarketer, "which could ultimately hurt Meta considering its reputation in this area."
The signal: Meta is following a path AlphabetDealroom has a profile for this one. Try Dealroom → set in 2004, when it used nonvoting shares to keep founders in control. The twist is the timing: altering its capital structure signals that operating cash alone no longer funds the AI buildout, even for one of tech's most profitable companies.
Read more: newsy-today.com, Meta Q3 2026 earnings call transcript, TechCrunch
Image credit: Anthony Quintano
