Meta Platforms is getting creative to fund its massive investments in artificial intelligence.
The company reported record revenue for the third quarter and said it would create a new class of nonvoting stock to raise the capital it needs for developing and serving AI models. The new stock will have an effective date in January 2027.
The company said it brought in $64.2 billion in sales, a 26% year-over-year increase, and net income of $9.8 billion. The revenue figure exceeded the expectations of analysts surveyed by FactSet. The net income total was considerably below analysts' forecast of $17.2 billion, dragged down by a $9.9 billion legal charge related to the company's settlement of social-media harm lawsuits.
Meta is plowing hundreds of billions of dollars into its effort to transform into an artificial-intelligence firm -- up to $145 billion in capital spending this year alone.
Investors have been hesitant to support the massive spending spree, repeatedly pushing Chief Executive Mark Zuckerberg to see near-term returns.
They responded warmly when Meta launched Muse, its new personal-assistant AI agent, in September. The app, which offers $20 and $100 a month subscriptions, has been downloaded more than 10 million times, according to SensorTower, a market intelligence firm. Meta's stock gained nearly 20% in the month after its debut.
Investors pointed to Meta's potential ability to monetize the app, with one estimate from Truist Securities projecting Muse could add $28.5 billion of incremental revenue by 2030.
But to become Meta's next large business, Muse will have to clear a number of hurdles, beginning with widespread unpopularity of AI as expressed in polls. Muse has also been blocked by dozens of websites, including Amazon.com, limiting its utility in carrying out shopping and other tasks.
Still, Meta sees Muse as the centerpiece of its whole operation and has restructured the company around the division that houses it, called Meta Superintelligence Labs. It also announced a new business line focused on selling AI tools to enterprise customers.
Another weight on the company's bottom line has been legal costs related to the many social media lawsuits it's facing. In August, Meta settled with 48 states for up to $18 billion and agreed to make a number of changes to the way its platforms operate accounts for teens.
On Wednesday, ahead of its earnings report, a judge in New Mexico ordered Meta to pay $25 billion after a jury found the social-media company misled users about its data-privacy practices. Meta didn't immediately respond to a request for comment about the judgment.