Meta’s AI spending and Muse adoption set to test Zuckerberg’s strategy

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Agencies

The company has been stepping up its AI push as CEO Mark Zuckerberg looks to build new sources of revenue beyond advertising and compete with OpenAI and Anthropic. Reuters reported that Meta’s latest AI launches, including Muse, have helped strengthen investor confidence in its strategy, even as the company commits hundreds of billions of dollars to expanding AI infrastructure.

Heavy AI spending puts cash flow in focus

Meta’s capital expenditure is expected to have more than doubled to $41.68 billion in the September quarter, according to Visible Alpha data cited by Reuters. The sharp increase in investment has already weighed on free cash flow, with analysts expecting a cash burn of $8.52 billion in the third quarter.

Still, investors are looking for signs that the spending can translate into stronger growth over time. BofA Global Research analysts said, "Recent AI launches have strengthened confidence in the company's AI execution," while also pointing to healthy advertising demand during the quarter.

Morgan Stanley analysts have raised their earnings estimates for 2027 and 2028 despite the higher spending, citing stronger advertising growth and the possibility that new AI products could generate additional revenue.

Muse adoption becomes a key test

Meta’s Muse assistant, which offers subscriptions, has received a positive response, adding to expectations that AI could eventually become a meaningful business beyond its core advertising operations.

Wall Street expects Meta’s revenue to rise 23.8% to $63.42 billion in the quarter, although growth is projected to slow from around 28% in the previous quarter amid competition from Google and TikTok. Net income is expected to fall about 17% to $15.44 billion, according to LSEG data cited by Reuters.

Meta shares have gained about 7% this year, trailing the S&P 500’s roughly 12% rise. The results will therefore offer investors a closer look at whether the company’s escalating AI investment is beginning to support growth strongly enough to justify the rising costs.