Meta Q3: Revenue Up 26% to $64.6 Billion as AI Costs Jump 68%

Meta grew third-quarter revenue 26% year over year to $64.6 billion, while its expenses climbed 68% over the same period, driven primarily by capital expenditures on AI infrastructure.

That is the core tension in Meta's Q3 earnings report, analyzed by industry expert Andrew Hutchinson in the latest edition of his "Sociable" commentary for Social Media Today. The ad business is still strong. The AI bill is growing far faster.

How big is Meta's audience now?

Meta's family daily active people count — the cumulative number of active users across Facebook, Instagram, Messenger, WhatsApp and Threads — rose by 40 million in the third quarter to 3.64 billion.

India is now Meta's biggest single user market, with advancing connectivity in the region opening new opportunities. The company also kept building its Asia Pacific presence, where ad impressions have grown by 24% this year, according to Merca 2.0.

In short: the apps are still adding users, and that growth remains the foundation everything else is built on.

What happened to ad impressions and prices?

Overall ad impressions across Meta's apps rose by 10% in Q3, per Meta. That is a slight decline against the company's more recent quarterly performance — which Hutchinson flags as "a little strange" given that Meta has added more ad placements and Threads keeps gaining traction.

Threads has now overtaken X in overall monthly active users, a claim Meta CEO Mark Zuckerberg made in an interview last month. That should create more ad inventory. But Hutchinson suggests Threads ads may have already hit saturation point, which would explain why the impression figures are normalizing.

Meta offset the slowdown by raising prices. Average ad prices were up 14%.

That is probably not welcome news for marketers. Meta's counter-argument, per Hutchinson, is that its ads are becoming more valuable through enhanced targeting powered by its evolving AI models.

The takeaway for advertisers: you're paying more per impression, and that trend has room to run.

How much is the AI push costing?

The 68% year-over-year jump in Q3 expenses is the number investors will watch. Meta previously told the market that expenses would keep rising in line with AI investment, and the company has pledged more than $600 million to AI infrastructure projects.

The spend curve is steepening. Hutchinson notes the spending charts "are also starting to look concerning" — and that trajectory underlines why the company needs to make more money from its AI tools, because right now it isn't making much from these next-level bets.

Reality Labs, the division covering Meta's AI glasses and VR headsets, brought in only slightly more revenue in Q3 than in the previous quarter. Meta can't cleanly match that revenue against costs, since its AI glasses are tied to broader AI spending. But Hutchinson's assessment is blunt: the backlash against misuse of the glasses has slowed sales and closed off another avenue for AI monetization.

Can Muse carry Meta's AI bet?

With hardware struggling, Meta will rely increasingly on its Muse agents to drive consumer AI adoption. The plan is for Muse take-up to eventually generate revenue through a percentage of sales activity conducted via the app.

Muse has its own problems:

• Last month, a Muse user said the AI bot gave out his home address without his knowledge to organize a Facebook Marketplace pick-up.
• This week, Ars Technica reported that security firm Claroc obtained reams of information on Muse user queries through simple exploration techniques.

Meta is working to reassure users that Muse is safe and built with data security in mind. Hutchinson's warning: more cases like these will hurt Meta's reputation and could make people less likely to adopt the chatbot or use it fully.

There's a retention problem, too. Morgan Stanley recently reported that Muse usage retention declines significantly two weeks after initial download, per a chart posted by @IntelFabs on X. That said, the drop-off is slightly better than what other AI chatbots have seen — ChatGPT, Claude and Grok all show similar post-download usage declines. So it's hard to judge how much this signals about Muse's long-term revenue potential.

What does the headcount number reveal?

Buried in the Q3 report is one more telling line: "Headcount was 66,775 as of September 30, 2026, a decrease of 15% year-over-year."

Meta has continued to replace human staff with AI tools, and Hutchinson says that figure likely reflects the shift.

What's the so-what?

Based on current spending, Meta's all-in bet on AI is still nowhere near producing significant revenue, Hutchinson concludes. The company needs Muse to be a hit to turn that around quickly.

If ad revenue keeps climbing, Meta can maintain a buffer against the losses — until all that AI spending comes due and investors start worrying about the angles of those charts.