META 的三季度电话会议表现积极：营收增长 26.1%，尽管有 98.9 亿美元法律和解以及 AI 资本开支带来的 21 亿美元负现金流，AI 仍在实现变现。按 21.8 倍市盈率计算，即使估值倍数不扩张，回报率也有 14% 至 15%；股价波动可能下跌，但如果 AI 资本开支能带来回报，这次电话会议正是投资者所希望看到的。

Meta has just released its earnings for the last quarter, reporting that it exceeded expectations in both revenue and net profit. As a result, the company's stock rose by about 3% in after-hours trading.

Despite this, the stock is still down about 5% over the past year, and its performance since the beginning of the year is 5.67% lower than the market .

This earnings conference revealed information of critical importance to the public, which is essential if you are considering investing in Meta or if you already own the stock.

If we take a closer look, we can see that the non-GAAP earnings per share for the third quarter came in at $7.40, exceeding expectations by about $0.60, but the GAAP earnings per share of $3.83 came in below expectations by $1.63.

Why did this happen? Why was there a significant decline in earnings per share according to Generally Accepted Accounting Principles (GAAP)?

In general, it can be observed that this ratio has been relatively stable since the third quarter of 2024. However, in the general and administrative expenses category, you will notice a significant increase in expenses as a percentage of revenues.

The main reason is the $9.89 billion legal settlement cost they had to pay in the last quarter. Of course, this was linked to the agreement reached in August with US state attorneys general regarding adolescent mental health and social media.

If we exclude this cost, this 23% figure would be closer to about 7.7%, which is more in line with what we saw in the third quarter of 2025 for general and administrative expenses.

So, obviously this is not ideal and not what you would like to see, but it is a one-time cost . If we continue to monitor, we see that revenues reached $64.6 billion, an increase of 26.1% year-on-year, exceeding expectations by about $1.2 billion.

Here we must pause for a moment and ask ourselves, where does this growth actually come from? In fact, we need to understand Meta's business model. This business is essentially an advertising activity more than anything else. 99% of their revenue comes from advertisers.

Advertisements on Facebook , Instagram, WhatsApp , and Messenger. This is essentially the bulk of their work.

As a result, this business activity does not require large capital investments. At least that was the case historically. Take a look at the type of profit margins this company has been able to achieve .

You can see that all the data will be loaded into my spreadsheet.

Now, we can see that gross profit margins have historically been in the range of 80%. In fact, the gross profit margin for last year was 82%. It is a very profitable company.

Although we recognize that this is advertising work, we can elaborate on it in more detail. In fact, growth ultimately depends on three different metrics. The number of people active daily in our family of apps, the number of times ads are displayed, and the average price per ad.

Simply put, how many people use their platforms, how many ads do they actually see, and how much do people pay to view those ads? When these three factors grow together, revenue growth is poised to rise significantly, and that is exactly what happened.

We can see that the number of people who are active daily has increased by about 3% year-on-year. So, it's a modest increase, but the number of ad impressions rose by 10% year-on-year.

And here comes the most important point: the average price per ad has increased by 14% year-on-year.

So, when you combine these three factors, you're talking about exceptional revenue growth. For this reason, revenues rose again by 26.1% year-on-year.

If we take a closer look at this, we can see that the number of daily active people in our family of apps has continued on an upward trend in almost every quarter over the past few years, with the exception of the fourth quarter to the first quarter of 2026, but overall we are still seeing very positive growth .

When we look at the average revenue per person for the family of apps , we find that the average revenue per person is now $17.72. Therefore, every person who joins the platform becomes more profitable for Meta.

Now, let's look at the total number of times the ads appeared. This is somewhat interesting because in many sectors, ad impressions have declined significantly, such as in the Asia-Pacific region, Europe, and the United States and Canada, at least compared to growth rates in previous quarters.

Growth remains generally strong. It is clear that it is still registering positive growth, but not at the speed we have seen in the past few quarters . But when it comes to average price per ad, this is where Meta really excels, because their global growth rate in the third quarter of 2026 was the fastest they've seen in the past year .

It is clear that the US markets are the most profitable for them, and that is where they are experiencing the greatest growth. So, from a revenue and profit perspective, it was a very strong quarter despite the one-off legal settlement costs .

But here's what many people need to point out . If you're pessimistic about Meta, this is what it talks about in its latest earnings report. The fact that Meta recorded negative free cash flows for the first time in a very long time.

Negative free cash flow, with a loss of approximately $2.1 billion. It's no secret why this happened. The increase in capital spending was expected. Meta is investing heavily to compete in the artificial intelligence race.

Remember, free cash flow is simply your operating cash flows, i.e., the basic cash that the business actually generates, less capital expenditure. Therefore, with this increase in capital spending , free cash flow will naturally decrease .

So, if we take a closer look at how this actually happens , let's come here and put in the "meta" data. You can see how operating cash flows have looked over the past decade , but you can also see a significant increase in capital spending.

And now, despite all this, free cash flow has grown significantly . But in 2025, you could see for the first time in a long time a decline in free cash flow. Free cash flow began to decline as capital spending increased.

You can see that capital spending for 2025 amounted to approximately $69.6 billion. Again , take a look at where we are so far in 2026, which is $85.8 billion. Meta is putting all its weight behind the artificial intelligence race.

So , suddenly, those optimistic about "Meta " were forced to justify this capital expenditure. Will this capital expenditure really pay off ?

Here we get more information from Meta in the latest earnings call . Perhaps most importantly , the user retention rate of Muse, Meta 's new AI proxy , outperforms ChatGPT and Claude.

The "Muse" app was installed 14.1 million times and reached 10 million downloads within 32 days of its launch. Currently, the app is only available in the United States and Canada.

Muse captured nearly 33 % of generative AI app downloads in America, while GPT's share dropped to 26.4% from 37.5% before Muse's launch. Gemini also lost market share.

But here's the quote from the recent earnings call that we really need to pay attention to . "User engagement and retention rates have gotten off to a strong start." About 25% of the people who set up "Muse" use it on any given day.

For our early users, the longer they used Muse, the better the retention rate seemed to become.

So, to put this into perspective, this is more than double the level at which Threads or other AI-based applications started . So, the user retention rate at Muse was very strong.

That said , why are they only present in the United States and Canada at the moment ? Okay, take a look at this statement. " Besides growth, we are focused on building sustainable unit economies.

The computing intensity at Muse means that expanding its user base will require significant investment."

Again, this goes back to the massive capital spending we are seeing. "We expect overall service costs to rise. This is the primary reason why they are only present in the United States and Canada at the moment."

This is due to the cost of computing and computing intensity.

But look at this. "At the same time, we expect computing cost efficiency to improve by more than tenfold over the next year." More than ten times that, that's substantial. "Driven by better utilization of capacity during off-peak times, more efficient models, and improved inference."

As revenues grow, these efficiency gains give us confidence in our ability to build a highly profitable business over time.

So, there is no doubt that computing costs are still substantial . This prevents them from expanding globally. However, they expect the cost to decrease tenfold. This is truly amazing when you think about it.

Now, remember how I said that Meta was historically primarily an advertising company. See this comment, which was also made in the recent earnings call. This is something that many people, from what I have seen so far, seem to overlook.

They stated, "For most people, the product should be free. Again, referring to Muse. We will build commerce tools so we can charge fees based on the transactions we help facilitate."

A significant portion of people using Muse are found to be using it for proxy trading, ordering things on their behalf. Now they say they are looking to charge fees based on the transactions they help facilitate.

This opens up a completely new revenue engine for the company.

They even mentioned that the most common use case for Muse is shopping, with over a quarter of Muse users participating, and an average purchase size exceeding $200. So, this could be a huge development for the company.

But what about those who still expect Meta's stock to decline ? What if they feel this level of capital expenditure is unjustified? Will Meta be able to generate enough revenue from AI to justify all this spending ?

Well, again, let's look at the comments in the latest earnings report. They stated, "In the third quarter, Nearly 10 million advertisers used at least one of these tools. Referring to their AI tools, " Advertisers' reliance on our video creation features grew by 25% quarter-on-quarter , driven in part by ready-made videos that reduce creation time to just a few seconds from uploading a single image."

So, will Meta be able to profit from artificial intelligence? Well, the short answer is that they are indeed seeing profitability as a result of this increased capital expenditure.

So, how does Meta actually look from an evaluation perspective now ? Well, what's interesting is that we see Meta's revenue estimates continuing their upward trend. Analysts continue to revise their forecasts upwards.

From a price-to-earnings (P/E) ratio perspective, the stock is now trading at approximately 21.8 times earnings. This is slightly higher than what we have seen on average over the past five years .

But even so, we can see that last year the price-to-earnings ratio declined slightly. They were trading at around 25 to 26 times earnings about a year ago at this time.

So, let's move on and look at them from a sensitivity analysis perspective . We will come here and add Meta. Well , what we can see based on the average earnings per share estimates of analysts at the moment is that the expected compound annual growth rate of earnings per share through 2030 is about 16%.

Therefore, strong earnings growth is expected, especially until 2029.

So, let's apply earnings per share growth of 16%. Then we apply an expected earnings multiple . Based on the past twelve months, they are currently at approximately their historical valuation level, which is a price-to-earnings ratio of 25 to 26 times.

For the first scenario, let's just assume they will continue to trade at their current level. Therefore, there is no expansion in the multiplier, which is unlikely if they continue to exceed expectations in generating profits from artificial intelligence.

You can see that the future returns are very attractive. We are talking about compound returns ranging from 14 to 15%.

What if we see some decline in the multiplier? What if the price-to-earnings ratio for the past twelve months fell to 20? Well, you can still look at the period from 2029 to 2031, where you are still looking at what has historically been above-average market returns.

Now, this is why I believe that Wall Street analysts are still extremely bullish on this stock, meaning an upside of about 19% in their 12-month price forecast , to around $828.

So, where does the stock stand after all this information? Well, actually, the big story is still exactly the same. Can they generate profits from artificial intelligence with this massive capital expenditure?

For Meta stock to succeed, it must generate a strong return on invested capital.

What we see from this earnings call is that this is still ongoing . Meta's "Muse" model has been extremely successful. They are opening up new sources of income through transaction fees.

The response was strong, and small businesses have already begun adopting their own AI tools , leading to increased Meta profitability.

So, was this a good earnings call ? Overall, I think it was . We all know how Meta stock trades . It is a very volatile stock . So I wouldn't be surprised if we see a decline in the stock in the coming days.

But I think if you're an investor in Meta, this call is exactly what I wanted to see.