Surging AI demand boosts Meta’s revenue, but hefty one-time tax dents profit

Facebook parent Meta capitalised on surging AI-powered ad demand to post robust third-quarter (Q3) 2025 revenue gains, though a hefty one-time tax charge dented its profit.

In Q3, the California-based firm’s revenue climbed 26.2% year-on-year to $51.2 billion, while its net profit dipped 82.7% to $2.7 billion.

The company’s net income reflects a one-time, non-cash tax charge of $15.93 billion in Q3 2025 under the One Big Beautiful Bill Act; excluding this, its net income would have been $18.64 billion.

The One Big Beautiful Bill Act is a US tax reform law that triggered a one-time accounting charge for companies like Meta by changing how deferred taxes are calculated.

Meta expects total revenue for the fourth quarter of 2025 to be between $56 billion and $59 billion. Based on the midpoint of $57.5 billion, this shows a YoY growth of 17.8%.

That said, the social media giant remains committed to its AI ambitions, with CFO Susan Li noting that capital spending is likely to grow significantly in 2026 than in 2025.

Capital expenditure, including principal payments on finance leases, totalled $19.37 billion in Q3. 

Li said the 2025 capex is now expected to range between $70 billion and $72 billion, up from the previous outlook of $66 billion to $72 billion.

Meta’s competitors Google, Microsoft, and Amazon have also sharply increased capital spending to scale up server and data centre infrastructure amid surging AI growth and rising computing demands.

Earlier today, Alphabet raised its full-year capital expenditure forecast for the third time this year to between $91 billion and $93 billion, up from $75 billion in February and $85 billion in July.

Building the future of AI

Meta has intensified its push into artificial intelligence (AI) with the creation of Meta Superintelligence Labs, a division focused on developing advanced AI systems. The company invested $14.3 billion for a 49% stake in Scale AI, a data annotation company based in San Francisco, and appointed its founder, Alexandr Wang, as the chief AI officer. 

“Superintelligence Labs is off to a strong start. I think that we have already built the lab with the highest talent density in the industry,” Meta Founder and Chief Executive Officer, Mark Zuckerberg, said, during the earnings call.

Zuckerberg said views differ on when superintelligence will arrive, noting that “some people think that we will get there in a few years, others think it will be five, seven years or longer.” He added that Meta’s strategy is to “aggressively frontload building capacity” to be ready if it comes sooner, positioning the company for “a generational paradigm shift.” 

If progress takes longer, he said, the additional computing power will still be used to accelerate Meta’s core business.

Meta has also been aggressively recruiting top talent from rivals such as OpenAI, DeepMind, and Anthropic with lucrative pay packages. However, it recently restructured the Superintelligence Labs unit, pausing hiring at large and cutting about 600 roles to streamline operations and refocus on high-impact AI projects.

The company ended Q3 with more than 78,400 employees, an 8% YoY increase, driven by hiring in key areas such as monetisation, infrastructure, Reality Labs, Meta Superintelligence Labs, and regulatory and compliance functions, according to Li.

Meta is developing its next generation of AI models and products, the details of which are expected to be shared in the coming months.

Ads business

The parent of Facebook, Instagram and WhatsApp saw a 25.6% YoY growth in its advertising revenue—its main source of revenue—which increased to $50.1 billion in Q3 FY25. The revenue of the total family of apps touched $50.8 billion, which includes advertising revenue.

Meta’s family of apps—Facebook, Instagram, WhatsApp, and Messenger—recorded an 8% year-on-year rise in daily active users, averaging 3.54 billion in September 2025. Ad impressions grew 14% over the year, and the average price per ad climbed 10%.

Meanwhile, Reality Labs, the division behind Meta’s virtual and augmented reality devices and metaverse initiatives, reported $470 million in Q3 revenue, up 74% year on year, driven by retailers stocking up on Quest headsets ahead of the holidays and strong sales of AI glasses. However, the unit posted an operating loss of $4.4 billion.

Next phase of growth 

According to Li, the company expects full-year 2025 expenses to range between $116 billion and $118 billion, up from the previous forecast of $114 billion to $118 billion, representing a year-on-year growth of 22% to 24%.

Li said that Meta is entering “an exciting point” in 2026, with plans to enhance core services and build new AI-powered experiences to drive growth. 

She also said the company’s compute needs “have continued to expand meaningfully” and that Meta will invest aggressively in infrastructure and cloud capacity. Capex and total expenses are expected to rise faster next year, led by AI-related and technical hiring.