Meta’s Q3 profit plunges on $16 billion one-time tax charge related to Trump's Big Beautiful Bill

Meta Platforms Inc. recorded a nearly $16 billion one-time charge in the third quarter related to US President Donald Trump’s Big Beautiful Bill, sharply denting its quarterly earnings.

Shares of the social media giant fell around 6% after hours following the announcement.

Excluding the charge, Meta said its net income would have risen to $18.64 billion, compared to the reported $2.71 billion.

Capital spending to rise sharply

Meta raised its full-year capital expenditure forecast to $70–72 billion, up from a previous range of $66–72 billion, and said spending in 2026 will be “notably larger.”

“Our compute needs have continued to expand meaningfully … we expect to invest aggressively to meet these needs both by building our own infrastructure and contracting with third-party cloud providers,” said Susan Li, Meta CFO.

Li added that employee compensation costs, particularly for AI hires, will be the second-largest contributor to rising expenses.

AI push drives rising costs

Meta continues to double down on artificial intelligence, pursuing its long-term goal of achieving superintelligence—a milestone where machines could surpass human reasoning.

In June, the company reorganized its AI initiatives under a new Superintelligence Labs unit following senior staff exits and lukewarm response to its Llama 4 model. CEO Mark Zuckerberg has since led a hiring spree for top AI talent.

“We’re willing to spend hundreds of billions to build the world’s most advanced AI infrastructure,” said Mark Zuckerberg, Meta CEO in an earlier statement.

Meta recently secured a $27 billion financing deal with Blue Owl Capital to fund a massive data center project in Louisiana, codenamed “Hyperion.”

AI unit restructuring and job cuts

In a surprise move last week, Meta announced around 600 job cuts within its AI division to streamline decision-making and increase accountability within teams.

Despite the cuts, the company’s AI infrastructure investments are mounting, adding short-term cost pressures even as Meta expects long-term growth and efficiency gains.

Expanding Ad reach across platforms

Meta continues to leverage its 3.2 billion daily active users to fuel ad revenue. Its AI-optimized ad platform automates campaign delivery, generates personalized visuals, and enhances video ad quality.

The company has also launched ads on WhatsApp and Threads, directly competing with Elon Musk’s X, while Instagram Reels continues to challenge TikTok and YouTube Shorts in the short-video market.

AI spending surge across tech industry

Meta’s heavy investment mirrors a broader industry trend. According to Morgan Stanley, major tech firms — including Alphabet, Amazon, Meta, Microsoft, and CoreWeave — are on pace to spend $400 billion on AI infrastructure in 2025.

However, such aggressive outlays amid economic uncertainty have sparked concerns of an AI bubble, raising expectations for measurable returns and heightening scrutiny of executive decisions.

(With Reuters inputs)