Meta Platforms (META) Shares Fall 7% on $34.9 Billion Quarterly Capex

Meta’s $34.9 Billion Capex Quarter

Meta Platforms closed its third quarter with a top-line beat that its capital spending wiped out. Shares of Meta Platforms (META) fell 7% on October 22 after the company reported sales growth of 26% against estimates, alongside capital expenditure of $34.9 billion for the quarter. Capex, the cash a company commits to data centers, servers and network buildout, ran ahead of operating cash flow in the period, which pushed free cash flow into negative territory. The stock sold off the day the numbers landed, and the drop was not a verdict on demand: the advertising business that funds the buildout kept performing. The question the market punished was arithmetic, namely how long a company can outspend the cash its own operations generate.

The spending came with a structural surprise. Alongside the results, the company’s investor-relations disclosure announced a new class of nonvoting Class C stock, a structure that would let Meta raise equity without diluting its founder’s voting control. Scotiabank’s analysts, revising their price targets after the print, flagged that management had pointed to a possible equity raise; the bank credited the strength of the core advertising business but kept concerns over the MUSE project on the table. A beat on ads paired with a financing question mark left the shares lower rather than mixed.

Meta is also first in line. Alphabet lost roughly 4% in after-hours trading in July after raising its own capex guidance, and a review of recent filings shows AI capital spending draining cash at Microsoft and Amazon as well. Four more tech giants now face the same test the market just administered to Meta, and the pattern of this earnings season, strong revenue paired with heavier buildout budgets, leaves each of them little room to disappoint on either side of the spending ledger.

Fed Decision Precedes the Earnings Wave

Drew Matus, chief market strategist at MetLife Investment Management, described the market’s reaction as a test with no winning side: firms that cut capex get punished, and firms that raise it get the same treatment. “I don’t actually really know what people want from these people,” Matus said in a Bloomberg interview. In his reading, investors want evidence that AI spending supports long-term growth, yet the debates over jobs and profits will persist no matter what a single quarter shows. He doubted that headline budgets will convert into actual outlays this year, since companies must first secure workers, equipment and land, though he noted the industries most exposed to AI are hiring more people, not fewer.

The next tests arrive quickly. Microsoft and Alphabet report on Wednesday, October 28, and Amazon and Intel follow on Thursday, October 29. Those four companies make up about 15% of the Nasdaq 100, an index that has lost roughly 7% this month, so a stumble by any one of them moves the benchmark.

The Federal Reserve meets October 27 and 28, and its decision lands Wednesday afternoon, hours before Microsoft and Alphabet are due to report. The Fed lifted its policy rate to a 3.75% to 4% range in September; traders then pared bets on another October increase after Chair Kevin Warsh said elevated inflation had not shifted his stance. Matus expects Warsh to skip a move this week and revisit policy in December. His broader warning ties the calendar together: AI drives capex, equity gains and consumer spending at once, a concentration he called more worrying than the stock market’s, and one weak outlook from a single company could test that entire chain.

META Presses Its Strongest Resistance

Meta stock last traded at $641.70, down 0.09% over the past 24 hours, still short of the resistance at $646.58 that COINOTAG’s composite scoring rates 100 out of 100, its strongest reading, built on the SMA 100, the R1 pivot and the 0.500 Fibonacci level. The nearest support sits at $632.53, scored 82 out of 100. The daily relative strength index reads 33.6 and the trend filter is bearish, so a daily close above $646.58 would mark the first structural break of that downtrend, while a loss of $632.53 would extend it.