IBM shares fall 6.5% as analysts question software rebound
IBM raised its annual software growth outlook but left its overall revenue forecast unchanged as analysts highlighted the contribution from delayed deals.
Meta revenue rises 26% as AI spending pushes free cash flow negative
Shares gained about 5% after hours, while the company lifted the lower end of its 2026 capital expenditure forecast to $135 billion.
Meta reported $64.6 billion in July-September revenue, a 26% increase, while heavy artificial intelligence investment pushed free cash flow into negative territory. Its shares rose about 5% after hours. The company said AI recommendations, greater advertising volume and higher ad prices supported revenue growth.
Quarterly profit climbed to $9.86 billion, equivalent to $3.83 a share. The year-earlier figures were $2.71 billion and $1.05 a share, reflecting a large one-time tax charge. Meta expects revenue for the current quarter to reach between $73 billion and $76 billion.
The company now projects 2026 capital expenditures of $135 billion–$145 billion, versus its previous $130 billion–$145 billion range. It offered no spending forecast for next year but said aggressive investment would continue. Quarterly free cash flow had not been negative since 2012.
Chief Executive Mark Zuckerberg said account registrations for Muse, the personal AI agent introduced in September, exceeded 10 million across the US and Canada. He said subscriptions, ads and e-commerce tools were among its expected revenue streams.
Legal expenses reduced earnings, including a $9.89 billion charge for an August agreement with 48 US states concerning social media's effects on teen mental health. That settlement could cost up to $18.59 billion. Separately, a New Mexico judge ordered a $25 billion payment after a jury found Meta deceived users about data privacy.
Meta's board also authorized publicly listed Class C common stock carrying no votes, effective in January, partly to help finance AI infrastructure. Each existing Class A or Class B share will receive one Class C share.
The arrangement could let Zuckerberg sell nonvoting stock to cover a potential California wealth tax while preserving his voting power. The proposal, Proposition 40, goes before voters in November.