Meta’s Q3 profit plunges on $16 billion one-time tax charge related to Trump’s Big Beautiful Bill
Meta Platforms Inc. recorded a one-time charge of nearly $16 billion in the third quarter related to U.S. President Donald Trump’s Big Beautiful Bill, which sharply reduced its quarterly earnings.
Shares of the social media giant fell around 6 percent in the hours following the announcement.
Excluding the fee, Meta said its net income would rise to $18.64 billion, compared to the reported $2.71 billion.
Capital expenditures will increase rapidly
Meta raised its full-year capital spending forecast to $70-72 billion from the previous range of $66-72 billion and said spending in 2026 would be “markedly larger.”
“Our computing needs have continued to expand meaningfully…we expect to make aggressive investments to meet these needs, both by building our own infrastructure and contracting with third-party cloud providers,” Meta CFO Susan Li said.
Li added that employee compensation costs, especially for AI hiring, will be the second largest contributor to rising expenses.
Artificial intelligence causes costs to increase
Meta continues to double down on AI, pursuing its long-term goal of achieving superintelligence, a milestone where machines can surpass human reasoning.
In June, the company reorganized its AI initiatives into a new Super Intelligence Labs unit following senior staff departures and a lackadaisical response to its Llama 4 model. CEO Mark Zuckerberg has since led a hiring spree for top AI talent.
“We are ready to spend hundreds of billions of dollars to build the world’s most advanced artificial intelligence infrastructure,” Meta CEO Mark Zuckerberg said in a previous statement.
Meta recently signed a $27 billion financing deal with Blue Owl Capital to finance a major data center project in Louisiana, codenamed “Hyperion.”
Restructuring of the artificial intelligence unit and layoffs
In a surprise move last week, Meta announced it was cutting nearly 600 jobs in its AI division to streamline decision-making and increase accountability within teams.
Despite the disruptions, the company’s AI infrastructure investments are increasing, and short-term cost pressures are increasing as Meta anticipates long-term growth and efficiency gains.
Extend ad reach across platforms
Meta continues to leverage its 3.2 billion daily active users to increase advertising revenue. The AI-optimized ad platform automates campaign delivery, creates personalized visuals, and improves video ad quality.
The company has also launched ads on WhatsApp and Threads in direct competition with Elon Musk’s X. Instagram Reels continues to challenge TikTok and YouTube Shorts in the short video market.
Artificial intelligence spending is on the rise in the tech industry
Meta’s heavy investment reflects a broader industry trend. According to Morgan Stanley, major technology companies such as Alphabet, Amazon, Meta, Microsoft and CoreWeave plan to spend $400 billion on artificial intelligence infrastructure in 2025.
However, such aggressive spending amid economic uncertainty has fueled AI bubble concerns, raised expectations for measurable returns, and brought greater scrutiny to management decisions.
