Meta Ad Revenue Climbs 26% to $63.1 Billion Despite $9.9 Billion Legal Charge

Meta grew advertising revenue 26% year over year to $63.1 billion in the third quarter, and its own AI tools did measurable lifting along the way. Total revenue reached $64.6 billion, also up 26%. Yet the same quarter absorbed a $9.9 billion pre-tax legal charge that cut operating income by more than a third. Both facts came from the same earnings report, and both shape what marketers should take from it.

What drove the ad growth?

Ad impressions delivered across Meta's services rose 10% year over year, which the company attributed to user engagement growth and ad load optimizations (the frequency at which ads appear in feeds). The global average price per ad climbed 14% versus Q3 2025, on the back of ad performance gains and improved macro conditions. Pricing, in other words, did slightly more work than volume.

AI was the throughline of the earnings call. Meta said its AI investments are already generating incremental advertising revenue through stronger engagement, improved recommendations and more efficient monetization. The evidence was specific:

• The company's GEM model (a recommendation model for ad delivery) lifted conversions by 1.7% for off-site conversion campaigns and 9.6% for app ads conversions.
• Nearly 10 million advertisers used at least one of Meta's generative AI creative tools in the quarter.
• Partnership ads (formats where brands co-run campaigns with creators or other partners) grew more than 97% year over year and passed a $15 billion annual revenue run rate.

CFO Susan Li put the AI claim directly: "Our AI investments are already delivering substantial incremental advertising revenue through stronger engagement, better recommendations, and more efficient monetization."

That is a strong promise. The company did not, in the reported figures, break out how much of the 26% ad revenue growth is specifically attributable to AI versus broader market conditions — the "improved macro conditions" cited on pricing sit in the same sentence as the performance gains.

What did the legal settlement cost?

The August 2026 Multi-State Attorneys General Agreement, which settled lawsuits over Meta's handling of youth mental health on its platforms, produced a $9.9 billion pre-tax charge in Q3 total expenses. The charge pushed GAAP operating income down 37% year over year to $13 billion, a 20% operating margin.

Li stressed during the call that excluding the settlement charge, operating income would have increased 11% year over year. That adjusted figure is a fair picture of the underlying business — but it is an adjusted figure, and the $9.9 billion is real cash against real liabilities. Both numbers are true at once.

Where is the money going?

Capital expenditures hit $34.9 billion for the quarter, which Meta said was driven by investments in servers, data centers and network infrastructure. That is the physical bill for the AI strategy the company says is already paying off in ad performance.

The takeaway in plain words: Meta's ad machine is compounding on pricing power and AI-driven performance, while a one-time legal charge and record infrastructure spending absorb the profits those gains would otherwise show.