Meta Tanks 12% as $16B Trump Tax Hit Guts EPS—AI Spend Stays Full Throttle

Forbes and CNBC contributed to this report.

Meta opened in a tailspin Thursday, dropping more than 12% to around $658.50 — its sharpest intraday slide since October 2022 — after a nearly $16 billion one-time tax charge torpedoed profits.

The social giant posted Q3 EPS of $1.05, miles below the $6.72 Wall Street expected, even as revenue jumped to $51.2 billion, topping the $49.5 billion consensus. Meta said that without the tax hit tied to President Donald Trump’s One Big Beautiful Bill Act, earnings would have landed at $7.25 a share.

The bill’s impact was immediate but comes with a twist: Meta expects a “significant reduction” in US cash tax payments for the rest of 2025 and beyond. Investors, though, had another worry — spending. CEO Mark Zuckerberg lifted 2025 capex guidance to $70–$72 billion (from $66–$72B) and doubled down on building capacity for “superintelligence,” arguing early AI investments are already paying off in the core ad business.

Reality Labs, Meta’s bet on VR and smart glasses, remained a money sink: a $4.4B operating loss on $470M in sales, slightly better than feared but still a heavy drag. The broader backdrop didn’t help sentiment either, with Big Tech peers also flagging bigger AI budgets; the question is how quickly those billions convert into durable cash flow.

Bottom line: the quarter’s operational beat got eclipsed by a $15.9B tax charge and a louder AI spend signal. If Meta can keep revenue growing at a mid-20s clip while the tax math eases and AI returns show up in margins, today’s plunge may prove more shock than shift. For now, the market wants proof that “build now, reap later” arrives sooner rather than later.