Meta’s $15.9B Tax Bill Triggers Wall Street Doubts

Meta’s third-quarter 2025 earnings made headlines as the tech titan reported $51.24 billion in revenue, a 26% year-over-year jump fueled by stronger user engagement and robust ad sales across its family of apps.

However, a $15.93 billion one-time tax charge — the result of President Donald Trump’s One Big Beautiful Bill Act — slashed profits to $2.71 billion, dragging earnings per share (EPS) down to $1.05. Without the tax hit, Meta noted EPS would have reached $7.25.

Investors reacted swiftly, with shares dropping as much as 9% in after-hours trading on October 29, reflecting concerns over rising costs and future spending.

In the announcement, the company also raised its full-year expense outlook to $116–118 billion and forecast $70–72 billion in capital expenditures for next year — a sign of what CEO Mark Zuckerberg called “the most exciting period in our history.”

From metaverse to machine intelligence

After the costly detour into virtual reality, Meta is now betting its future on artificial intelligence. The company has already poured $14.3 billion into Scale AI, launched construction of a $1.5 billion data center in El Paso, Texas, and signed a $27 billion financing deal with Blue Owl Capital for its Hyperion data campus in Louisiana.

Former Metaverse chief Vishal Shah now leads Meta’s AI product strategy under Nat Friedman, underscoring the company’s strategic pivot. Meanwhile, Reality Labs, once synonymous with VR, is being reshaped to focus on AI-driven hardware — chiefly, smart glasses.

AI glasses take center stage

Reality Labs still posted a $4.4 billion quarterly loss, yet its latest release, the $799 Ray-Ban Meta Display glasses, sold out soon after launch. Equipped with built-in displays and a neural wristband, the device marks Meta’s first serious push to merge AI with social and wearable technology. Zuckerberg says manufacturing is ramping up to meet demand.

Beyond hardware, Meta is also weaving AI into its software suite. The Meta AI app recently introduced Vibes, a feed of AI-generated videos, driving a 56% month-over-month spike in downloads—a signal of strong user appetite for generative content.

A smarter future

With billions flowing into AI infrastructure and talent, Zuckerberg’s message to investors is clear: Meta’s next era will be defined by intelligence, not immersion.

Whether the pivot from virtual worlds to intelligent systems satisfies Wall Street remains to be seen— but Meta appears determined to build the future of social technology one algorithm at a time.