Meta Q3 Earnings Preview: Revenue May Exceed Expectations, 2027 Spending Is the Key Disagreement

Meta will release its Q3 earnings after market close on October 21. The market generally holds an optimistic view on quarterly revenue, but the real divergence lies in whether a balance can be achieved between 2027 capital expenditures and AI monetization—this will determine the stock’s direction after the financial report.

According to Bank of America Securities analyst Justin Post, Meta’s Q3 revenue is expected to be about $63.8 billion, slightly above the consensus estimate of $63.3 billion. This judgment is mainly driven by robust ad market channel survey data showing healthy growth. Bank of America maintains a "Buy" rating on Meta with a target price of $810.

Beyond the results for the current quarter, the true focus of this report is the spending trajectory toward 2027. Meta faces a one-time $10 billion settlement accrual with state attorneys general, which will bring GAAP operating profit for the third quarter down to $11.5 billion—significantly lower than the market’s expected $18.6 billion; EPS will also drop to $3.79 compared to the consensus of $6.08. Excluding this non-recurring item, Bank of America estimates earnings above consensus, but analysts warn that if management indicates capital expenditures or operating expenses for 2027 may further increase, or if the AI monetization process is delayed, risks of stock price pressure should not be ignored.

Revenue Side: Ad Inspection Data Provides Support

The logic for an earnings beat on revenue in this Q3 report is relatively clear. Justin Post notes that results from ad market channel research are solid, supporting Bank of America’s revenue forecast above consensus. Bank of America estimates $63.8 billion, slightly higher than street expectations of $63.3 billion, and analysts believe the implied market expectation may have approached $64 billion.

From the options market perspective, the implied volatility for Meta’s earnings this time is about 4.1%, while the actual average volatility across the past eight quarters is as high as 7.4%, suggesting current options are historically cheap. Bank of America’s derivatives team data shows Meta’s implied volatility ranking is low in long/short screens, reflecting overall optimism about the quarter and insufficient volatility expectations.

This quarter’s GAAP profit figure will be significantly distorted due to one-time items.

Meta previously announced that, affected by the “youth protection” lawsuit, the company will accrue $10 billion in settlement costs with state attorneys general in the third quarter. Bank of America expects this will reduce Q3 GAAP operating profit to about $11.5 billion, well below the market consensus of $18.6 billion; accordingly, GAAP EPS is expected to be $3.79, compared to consensus expectations of $6.08.

Bank of America emphasizes that, after excluding this non-recurring accrual, the company’s profitability is actually above the consensus level, so investors need to distinguish between these two sets of numbers to avoid misinterpreting the profit figures.

The market has little disagreement on quarterly revenues; what truly makes investors nervous is the medium-term spending path.

Bank of America analysts listed the key risk points for this earnings call: First, if management indicates that there is further upside to 2027 capital expenditures or operating expenses; second, if the AI monetization timeline is delayed—products like Muse will consume a lot of compute resources in the near term, but have not yet directly contributed to revenue.

Analysts expect Meta will not give formal 2027 capex guidance at this call but may provide a qualitative framework.

From a more macro perspective, Bank of America equity strategist Savita Subramanian points out that this year, the capital expenditure growth of tech giants has outstripped revenue growth by about 50% versus 20%, and market consensus models rely on the assumption that AI-related revenues will catch up with capex in the second half of 2027. If Meta’s call content casts doubt on this assumption, it would create substantial valuation pressure.

Besides spending, analysts expect the call to focus on the following areas: user adoption rate and per-user Token cost for Muse, enterprise AI opportunities, strategies for large language models and infrastructure.

Potential positive catalysts include: additional AI-driven contribution to the ad business, disclosures on user traction for new AI products, and projections on improvements in infrastructure efficiency. Potential risks come from softer Q4 guidance due to macro environment, FX, or marginal weakening of AI-related benefits, as well as a lack of clarity on the path to AI monetization by 2027.