The bill for the artificial intelligence revolution has arrived. Last week’s third-quarter earnings call from Meta Platforms was a wake-up call for those still intoxicated by the 2024 hype cycle. While the top-line numbers looked healthy, a structural shift in spending is cannibalizing the very margins that made Meta a darling of the Magnificent Seven. The street is no longer rewarding the promise of AI; it is demanding a return on investment that has yet to fully materialize.
The Capex Trap and the Seventy Billion Dollar Ceiling
Meta has officially raised its 2025 capital expenditure guidance to a staggering $70 to $72 billion range, a significant jump from prior estimates. To put this in perspective, this infrastructure spend is nearly double what the company allocated just eighteen months ago. Mark Zuckerberg’s strategy is clear: front-load compute capacity to ensure Meta remains the standard-bearer for open-source AI. However, this aggressive build-out comes at a steep price. Total expenses for 2025 are now projected between $116 and $118 billion, per the October 29 Reuters report covering the earnings fallout.
Normalized Earnings and the Sixteen Billion Dollar Tax Phantom
Headlines following the October 29 release screamed of a profit collapse, with net income appearing to dive to $2.71 billion. This is a mirage. The figure was decimated by a one-time, $15.93 billion non-cash tax charge related to the newly implemented U.S. Corporate Alternative Minimum Tax. Stripping away this accounting anomaly, normalized net income actually sat at $18.64 billion, as noted according to Bloomberg’s analysis of the Q3 call. Even with this adjusted strength, the market sold off 8% because of the 2026 outlook. Zuckerberg warned that expense growth next year will be significantly faster than 2025, primarily driven by AI talent poaching and massive data center power requirements.
Technical Support and Options Volatility
From a technical standpoint, the stock is testing the resolve of long-term holders. After sliding from its August peak near $796, Meta is currently hovering around the $650.41 level. Traders are watching the 200-day moving average, which currently sits near $641, as the critical line in the sand. A breach below this level could trigger a liquidation event toward the $610 support zone. The volatility surface shows a heavy concentration of put buying at the $620 strike for December expiries, indicating that institutional players are hedging for a deeper winter correction.
| Metric | Q3 2025 Result | YoY Change |
|---|---|---|
| Total Revenue | $51.24 Billion | +26% |
| Ad Impressions | Family of Apps | +14% |
| Reality Labs Loss | ($4.6 Billion) | Stable |
| Capital Expenditure | $19.37 Billion | +110% |
The Llama 4 Dilemma
Internal friction is reportedly mounting over the delayed release of the Llama 4 Behemoth model. While the smaller Scout and Maverick variants have seen wide adoption, the true frontier model remains stuck in the lab. This delay is dangerous because competitors like OpenAI and Google are not standing still. Meta’s open-source gambit only works if their models are at the absolute edge of performance. If Llama 4 fails to match the reasoning capabilities of GPT-5 when it finally debuts, Meta will have spent fifty billion dollars to build a very expensive second-place engine. Watch the first quarter of 2026 for the first full-scale deployment of Llama 4 Behemoth, any further delay there will likely break the current $641 support level permanently.
