META Stock Faces Earnings Test as Muse AI Spending Hits $145B

META stock faces a test ahead of Meta Platforms’ third-quarter earnings announcement on Oct. 21. The shares recently retreated toward $738 as investors assessed the company’s rising artificial intelligence spending.

Meta has continued expanding its AI offerings, including the recently introduced Muse Wonder models. However, investors are questioning how quickly those investments can generate additional revenue.

The company expects annual capital expenditures of $130 billion–$145 billion. Its earnings report will provide another opportunity to assess spending, margins, and cash generation.

Meta Platforms to Publish its Earnings

The next few days will be important for Meta Platforms, the parent company of Instagram, WhatsApp, and Facebook as it releases its first financial results after launching Muse.

Yahoo Finance data shows that analysts expect its revenue growth to continue in the second quarter. The average estimate among analysts is that its revenue jumped by 23% in Q3, driven by its advertising business. If this is accurate, the revenue will move to $63 billion, up from $51.2 a year earlier. Most of Meta Platform’s revenue is coming from its advertising business, which has continued to grow this year.

The average estimate is that its earnings-per-share (EPS) soared from $1.05 in Q3’25 to $5.94 in Q3’25. For the year, analysts expect the results to show that its earnings-per-share will come in at $30.8 from $23.49 a year earlier.

The most recent results showed that Meta Platform’s business continued doing well. Its revenue rose to $60.8 billion from $47.5 billion in the second quarter of last year.

The challenge, however, is that the company’s expenses continued soaring. Its expenses as a percentage of revenue soared to 70%, its highest level in years. This surge was driven by research and development (R&D) as it continued to work on its AI solutions.

Muse and Capital Expenditures

The upcoming earnings report will be important for several reasons. One of them is its capital expenditure, which has been in a strong upward trend in the past few years. It had already spent $50.9 billion in the second quarter, up from the $30 billion it spent in all of last year.

The company expects that its annual capital expenditure will be between $130 billion and $145 billion. This surge has had substantial impacts on its free cash flow (FCF), which dropped by $784 million in the second quarter from $8.5 billion last year.

The other top catalyst for the stock will be the impact of Muse, its recently launched AI assistant. Muse has seen substantial downloads since its launch a few weeks ago. It had over 5 million downloads in the last 22 days, although the momentum has started to fade.

The company followed the launch of Muse with that of Muse Wonder and Muse Wonder Full models. In a statement, the company said that the two models were created to deliver state-of-the-art performance on personal and professional agentic tasks. It believes these models are nearing the performance of those from Anthropic and OpenAI.

Meta Platforms Stock Price Technical Analysis

The daily chart shows that META stock has rebounded from a low of $520 in April this year to a high of $780 last month. It has now gone sideways as the momentum faded, as investors booked profits after the Muse launch.

A closer look at the chart shows that the stock has formed a bullish flag pattern. This pattern happens after an asset makes a parabolic move and then consolidates. It often leads to a strong bullish continuation.

The stock has remained above all moving averages. Therefore, the stock will likely have a bullish breakout, potentially to the key resistance level of $780. A move above that level will point to further gains, potentially to $800.

This article is for informational purposes only and does not constitute financial or investment advice.