Meta shares rose about 3% in after-hours trading following its earnings report, with analysts focusing on strong advertising business and progress in Muse AI.

BlockBeats news, October 22: Meta's third-quarter revenue surged 26% year-over-year to $64.6 billion, beating market expectations; adjusted earnings per share (excluding one-time legal expenses) also significantly exceeded expectations. Following the earnings release, the stock rose about 3% to 4% in after-hours trading.

Specifically, advertising revenue grew 26% year-over-year, ad impressions increased 10%, average ad prices rose 14%, and daily active users across its family of apps reached 3.64 billion. GAAP EPS was $3.83, primarily impacted by approximately $9.89 billion in one-time legal settlement expenses (related to settlements with multiple U.S. state attorneys general over lawsuits concerning teen mental health and social media); excluding this expense, adjusted EPS was approximately $7.40.

The company provided fourth-quarter revenue guidance of $73 billion to $76 billion, with the midpoint above market consensus. Full-year capital expenditure guidance narrowed to $135 billion to $145 billion. Reality Labs revenue fell short of expectations, with an operating loss of approximately $4.1 billion; the company expects the division's full-year loss to narrow to $18 billion to $19 billion, and further decline to approximately $15 billion by 2027.

Pivotal Research's Jeffrey Wlodarczak raised his price target from $930 to $960 following the earnings report, noting that revenue and capital expenditure performance beat expectations, and particularly highlighted positive Muse usage data: more than a quarter of Muse users made purchases through the agent, with average purchase amounts exceeding $200.

Jefferies' Brent Thill said the fourth-quarter guidance "leaves room for upside." Meanwhile, BMO Capital's Brian Pitz maintained a Hold rating and $580 price target; while acknowledging Muse's early momentum and AI product progress, he remains focused on the visibility of returns on the high capital expenditures in 2026-2027 and the cost trajectory.

Wall Street overall maintains a "Strong Buy" consensus rating on Meta, with an average price target of approximately $820, implying about 17% upside. The market widely believes that the strong advertising engine (fueled by AI recommendation systems and generative AI tools) is funding large-scale AI infrastructure investment, while Muse, as an early attempt at personal superintelligence, has already demonstrated commercialization potential (including shopping and potential subscription scenarios). Although free cash flow turned negative due to high capital expenditures and legal expenses weighed on reported profits, investors are currently more willing to pay for growth and the AI narrative rather than overly worrying about short-term expense pressure.