✎ Contributed by Ty Griffin
Meta Platforms shares fell sharply after the company reported negative third-quarter free cash flow and increased the minimum of its expected capital expenditures. Free cash flow totaled negative $2.12 billion, while Meta raised its full-year capital spending outlook to between $135 billion and $145 billion from a previous range of $130 billion to $145 billion.
The company’s five-year credit default swap spreads reached record highs as investors assessed the financial impact of its expanding artificial intelligence investments. Meta also announced plans to create a new class of nonvoting Class C common stock that could help finance future growth while preserving its founder-led control structure. Revenue increased 26% to $64.60 billion, exceeding analysts’ expectations.
Market Reaction
- Meta Platforms Inc. (NASDAQ: META): $654.12, down $43.40 (6.22%)
- Alphabet Inc. (NASDAQ: GOOGL): $327.65, down $7.11 (2.12%)
- Amazon.com Inc. (NASDAQ: AMZN): $252.89, down $9.48 (3.61%)
- Microsoft Corp. (NASDAQ: MSFT): $526.56, down $6.39 (1.20%)
- NVIDIA Corp. (NASDAQ: NVDA): $213.74, down $8.23 (3.71%)
Investor Sentiment
Meta’s revenue growth demonstrates continued strength in its core business, but negative free cash flow has intensified concerns about the cost of its AI ambitions. Investors are increasingly demanding evidence that heavy spending on data centers, computing infrastructure and new products can generate returns without weakening the company’s financial flexibility.
The broader decline among major technology companies reflects anxiety about the scale and duration of AI capital expenditures across the industry. NVIDIA stands to benefit from continued infrastructure demand, while Alphabet, Amazon and Microsoft face similar pressure to prove that their investments can produce sustainable revenue and profit growth.
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