Meta (META) on Wednesday reported third quarter earnings beating expectations on revenue, but falling short on earnings per share due to a one-time tax related charge.
Meta stock plummeted more than 6% following the news.
For Q3, Meta is saw earnings per share of $1.05 and revenue of $51.24 billion versus expectations of EPS of $6.72 on revenue of $49.6 billion, according to Bloomberg consensus estimates.
Family of apps revenue hit $50.77 billion versus an anticipated $48.6 billion.
The social media giant has been on a massive spending spree in recent months, laying out billions to hire talent and build the data centers necessary to meet its demand for AI.
So far, that’s included investing $14.3 billion in Scale AI (SCAI.PVT) and hiring its CEO as chief AI officer; plowing at least $1.5 billion into a new data center in El Paso, Texas; and entering into a $27 billion financing deal with Blue Owl Capital to pay for its massive Hyperion data center in Richland Parish, La, and pouring millions more into poaching AI experts from rival tech firms, including OpenAI and Apple.
At the same time, the company laid off some 600 workers from its AI division, continuing a trend among Silicon Valley heavyweights cutting back on employee ranks.
Unlike cloud providers Amazon (AMZN), Google (GOOG, GOOGL), and Microsoft (MSFT), which are also spending heavily on AI, Meta isn’t angling to sell its AI offerings to enterprises. Instead, the company is using the technology to power its advertising business and drive ever more user engagement.
Meta shares are up 27% year to date and 26% over the last 12 months. That trails advertising rival Google’s 43% year-to-date jump and 60% increase over the last 12 months.
Meta is also putting its AI to work inside of its hardware products, including its Ray-Ban Meta smart glasses, Quest 3 headset, and newly announced Meta Ray-Ban Display glasses.
But Futurum research director and practice lead for intelligent devices Olivier Blanchard says Meta still isn’t quite clear on how its hardware will ultimately benefit consumers.
“I am less bullish on Meta Platforms than a lot of my peers, and worry that senior leadership continues to not quite understand what kinds of problems should be solved by their products (I am primarily thinking about the XR segment and Meta AI), and what types of remarkable experiences could be delivered by their products,” Blanchard wrote in an email.
Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.
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