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Meta falls as investors balance Muse growth with rising AI costs

By Thomson Reuters Oct 22, 2026 | 7:07 AM

Oct 22 (Reuters) – Shares of Meta Platforms fell about 3% in premarket trading on Thursday, as investors weighed the benefits of the company’s fast-growing AI ​agent business against the mounting costs of funding ‌its ambitious AI expansion.

The stock has gained more than 5% this year and, if current losses hold, is set to erase about $50 billion from the company’s market value.

• The downbeat reaction comes despite ‌Meta ​reporting stronger-than-expected quarterly revenue, forecasting fourth-quarter ⁠sales above Wall Street ⁠estimates and highlighting rapid adoption of its new AI agent app, Muse

• The earnings report came hours after a New Mexico judge ordered the company to pay ​a $25 billion penalty in a data-privacy case linked to Cambridge Analytica. Meta said it plans to appeal the ⁠ruling

• The Instagram parent is spending ⁠heavily to support its AI plans, with ​an expected annual capital expenditure forecast between $135 billion and $145 billion. ​It also reported a free cash flow deficit of $2.12 ‌billion in the third quarter, compared with positive free cash flow a year earlier

• Deutsche Bank analyst Benjamin Black said Meta’s AI investments were generating stronger advertising performance ⁠and engagement, creating a “positive thesis creep” around the stock as investors increasingly view computing infrastructure as a revenue-generating asset rather than ⁠a cost burden

• ‌Meta also announced plans to create a ⁠new class of non-voting Class C shares, ​giving ‌the company additional flexibility for acquisitions and ​employee compensation ⁠while preserving CEO Mark Zuckerberg’s voting control

• At least 13 brokerages have raised their price targets on the stock after the results, according to data compiled by LSEG

(Reporting by Prathik Jayaprakash in Bengaluru, additional reporting by Rashika Singh; Editing ​by Devika Syamnath)