{"id":440366,"date":"2026-10-19T16:40:06","date_gmt":"2026-10-19T09:40:06","guid":{"rendered":"https:\/\/www.swingfish.trade\/blog\/market-news\/stock-earnings-pick-of-the-week-meta-faces-a-145-billion-question-after-the-tech-rout-440366\/"},"modified":"2026-10-19T16:40:06","modified_gmt":"2026-10-19T09:40:06","slug":"stock-earnings-pick-of-the-week-meta-faces-a-145-billion-question-after-the-tech-rout","status":"publish","type":"post","link":"https:\/\/www.swingfish.trade\/blog\/market-news\/stock-earnings-pick-of-the-week-meta-faces-a-145-billion-question-after-the-tech-rout-440366\/","title":{"rendered":"Stock earnings pick of the week: Meta faces a $145 billion question after the tech rout"},"content":{"rendered":"
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The tech rout last week has certainly come at a rather interesting time for markets. While it was on the back of hotter-than-expected inflation data, the reaction was one that ran against the bond market as Treasury yields fell sharply last week. As such, it definitely begs the question as to whether there is some other underlying factor driving the retreat in tech stocks in particular.<\/p>\n

Is it a case that investors are waking up to the struggles in the market breadth and momentum<\/a>? Or is it investors simply asking the question of whether all the AI spending is actually going to pay off?<\/p>\n

With that in mind, there’s certainly a lot on the line as we look to the earnings calendar this week. And among the big tech names, Meta is arguably my pick on what will really stand out against the above backdrop.<\/p>\n

The Nasdaq already slumped by over 4% last week and despite futures posting a modest bounce to start the new week, the underlying sentiment remains shaky.\u00a0So, another strong earnings report might not necessarily be enough to win investors over this time.<\/p>\n

Analysts are expecting revenue of around $63.3 billion, up 24% from a year ago, alongside earnings of $5.60 per share. The latter would be a massive jump from the $1.05 reported last year, although that comparison is distorted by a $15.9 billion one-off tax charge in the previous period.<\/p>\n

However, I would argue that the bigger story\u00a0isn’t really about whether Meta beats those estimates. As we have seen with many of these big tech earnings releases, it’s all about\u00a0how much money these companies are spending to keep their AI ambitions alive. And it will be the same story for Meta this week as well.<\/p>\n

The firm had previously said that they are planning to spend between $130 billion and $145 billion on capital expenditures<\/a> this year. Now, that is a rather staggering amount and we’re also seeing that show up in terms of financial impact.<\/p>\n

In the second quarter, revenue grew 28% but operating expenses jumped 55%, partly due to legal and restructuring charges. Meanwhile, operating margins fell to 31% from 43% a year earlier, with free cash flow dwindling to just $784 million from $8.55 billion.<\/p>\n

Don’t get me wrong. Meta’s\u00a0advertising business is still performing strongly. However,\u00a0there’s a difference between having a profitable business to fund AI investments and proving that those investments are actually worth the money.<\/p>\n

As such, that is where the outlook for 2027 will be a key focus to watch.\u00a0Some Wall Street estimates are already suggesting that capital spending could climb towards $190 billion to $225 billion next year. But really, how much\u00a0longer can that spending keep growing before investors demand clearer returns?<\/p>\n

It’s an argument that we have all been harping on since the start of this year already and with every quarter that goes by, we are surely getting closer and closer to knocking down that door.<\/p>\n

And with\u00a0Treasury yields still elevated,\u00a0investors may have lesser and lesser room to be less forgiving of expensive AI promises. With that in mind,\u00a0I reckon Meta will need to offer more than another upbeat outlook to really keep investors assured.<\/p>\n

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This article was written by Justin Low at investinglive.com.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"

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