• Meta reported $64.6 billion in third quarter revenue, up 26% annually, topping the $63.3 billion analysts projected. 
• Third quarter results include a $9.89 billion charge related to payouts from teen mental health and social media trials
• The company plans to issue a new class of non-voting stock to help fund its AI investment and other acquisitions.

Not even a landmark legal settlement over accusations of the harms Meta’s social networks have had on teens could stop it from beating Wall Street expectations for its third-quarter results.

The tech giant reported $64.6 billion in third quarter revenue, up 26% annually, outpacing the $63.3 billion analysts projected. The company also reported a net profit of $9.86 billion, or $7.40 a share, compared with a year-earlier gain of $2.71 billion, or $1.05 a share. Excluding those legal fees, which amounted to $9.89 billion, its per-share earnings were $7.40, handily beating the $5.46 Wall Street had expected.

In August, the company settled a lawsuit related to teen mental health and social media cases with payments up to approximately $18.59 billion.

But the nearly $10 billion payout barely affected the company’s bottom line and barely registered on its follow-up conference call with investors. In the company’s opening remarks on the earnings call, Chief Financial Officer Susan Li briefly addressed the company’s legal related costs as part of the quarterly report, but the social media trials — of which there remain numerous — and their subsequent fees were never mentioned again.

Meta CEO Mark Zuckerberg leaves the Federal Courthouse in downtown Los Angeles after defending the company in a landmark social media addiction trial in Los Angeles, United States, on February 19, 2026. (Photo by Jon Putman/Anadolu via Getty Images)

Meta also narrowed its capital expenditure range from $130 to 140 billion to $135 to 140 billion with more spending poured into AI. The company said that its AI investments are already delivering “substantial incremental advertising revenue” with stronger engagements and more targeted recommendations. Mark Zuckerberg said that WhatsApp is already the leading sservice where people engage with Meta AI.

To expand its ability to invest in AI, as well as make acquisitions and fund employee compensation, Meta said it would create a new class of non-voting stock starting in January 2027.

As part of the August settlement, the company agreed to implement several measures designed to limit social media usage for children and teenagers, changes it called for competitors YouTube and TikTok to also adopt in an open letter. They will pay out the $18 billion over the next 10 years.

While Meta’s settlement was not surprising, the question remains if the legal cases will lead to safer user behavior for children growing up online. Based on the lack of response or line of questioning on the earnings call, the tech company does not seem to be too worried.

Meta was hit with another large fine Wednesday. The tech company will have to pay a $25 billion fee for misleading Facebook users about its data privacy practices. New Mexico Judge Francis J. Mathew imposed one of the largest penalties against a tech company to date with the ruling, which found that that Meta committed nearly 44 million violations of New Mexico’s consumer protection laws.

That fine wasn’t addressed at all during the call.

Muse takes off

Meta CEO Zuckerberg said that the company’s investments are paying off.

The company’s Muse AI agent, which launched last month, has already garnered 10 million users in U.S. and Canada, its first two markets. Zuckerberg said that given the computing requirements of the service, it will take time to expand globally.

In addition, its ads business is reporting faster year-over-year revenue growth due to businesses’ embracing of the company’s AI models.

“Nine million small businesses on our platforms are now using at least one of our AI creative tools, and we’re rolling out new end-to-end creative solutions that help advertisers translate performance data into their creative decisions,” Zuckerberg said.

Meta said its ad models and AI-driven user understanding contributed to an 8.3% increase in Facebook ad clicks and a 15.7% uplift in conversions. An early Instagram pilot using LLMs to better understand user preferences lifted app-event conversions 1%.

He said that Muse AI will “supercharge” this push. Zuckerberg noted that users’ daily interactions with its assistant increased 60% after it rebuilt Meta AI and integrated MuseSpark.

The executives did not provide a standalone figure for AI revenue or a direct return-on-investment measure, but they cited investment in the tool as a primary driver of the company’s expenses for the year, which were up 55% year over year.

How consumer behavior affects algorithms and AI usage

Susan Li, Meta’s chief financial officer, said that the app’s content recommendations have improved in the third quarter as time spent on platform increased year-over-year.

“On Instagram, global time spent this quarter grew double digits year over year this quarter, largely driven by improvements to our feed and reels recommendations,” she said. “On Facebook, video time spent increased 9% globally year over year and over 10% within the U.S. and Canada, where it was driven by ranking improvements.”

She added that the platform will continue improving recommendations over the rest of the year and into 2027, leaning on their AI investments to deliver on this.

The CEO also revealed that 3.6 billion people used at least one of the tech giant’s apps each day. Instagram reached 2 billion daily active users. Threads crossed 500 million monthly active users, making it the fastest-growing conversation app ever, according to the executive. And Facebook has held strong with more than 2 billion daily active users.