Meta Bets on Muse as Legal and AI Costs Mount

Meta reported a strong third quarter in its first earnings period since launching the Muse AI agent. Revenue rose 26% year over year to $64.6 billion, beating analyst expectations by more than $1 billion. Diluted earnings per share were $3.83, but included a $9.89 billion legal settlement charge related to teen addiction litigation; excluding that charge, EPS would have been $7.40. The article says the unusual range of analyst EPS estimates makes comparisons difficult, while investors appeared more encouraged by the revenue result and company guidance. Meta shares rose 2% after hours. The main focus is Muse’s early adoption and potential to generate revenue. CEO Mark Zuckerberg said more than 10 million people in the U.S. and Canada had set up personal agents within six weeks, and roughly a quarter of those users used Muse on a given day. Shopping is its leading use case, with more than 25% of users engaging in agent-led shopping. The article views retention and early payment activity as encouraging, while emphasizing that Meta must scale the service, grow revenue, and improve compute efficiency. Its planned monetization includes transaction fees from e-commerce, paid tiers for power users, and business services. Meta also plans to sell high-margin AI inference through its Enterprise Platform and related products. Zuckerberg expects compute cost-efficiency to improve more than tenfold over the next year. Meta’s existing advertising business is presented as a financial foundation for continued AI investment. Facebook and Instagram saw record engagement, Threads reportedly surpassed X in monthly active users, and WhatsApp recorded a high in messages sent. Ad prices increased 14%, though ad impressions grew more slowly and daily active people missed expectations. Reality Labs lost $4.13 billion; the article notes the loss was below expectations but greater than a year earlier, and cites a forecast of $15 billion in operating losses in the year ahead. Overall, the piece is optimistic about Muse and Meta’s prospects while acknowledging execution, cost, and forecasting uncertainties.

Meta CEO Mark Zuckerberg used the company’s Wednesday earnings call to highlight its progress in artificial intelligence and argue for further investment. The company said its Muse AI agent had attracted 10 million users in the six weeks since launch. Meta also reported third-quarter revenue of $64.6 billion, a 26% increase according to the headline. The segment notes that Meta faces accusations of political interference in Brazil’s presidential election, but provides no details or response to those allegations. It also previews a separate topic: France’s rising borrowing costs. The France 24 business segment, presented by Charles Pellegrin and Bryan Quinn, is a short report focused on Meta’s AI activity and financial results, with additional coverage of the Brazil allegations and French borrowing costs.

Meta reported stronger-than-expected third-quarter revenue and forecast fourth-quarter revenue above analysts’ estimates, while CEO Mark Zuckerberg emphasized the growing popularity and long-term potential of the company’s Muse AI agent. Zuckerberg said more than 10 million people in the U.S. and Canada had created Muse accounts in its first month and a half. He expects the service could eventually reach billions of people and become more valuable as users and businesses join its network. Meta plans to monetize Muse sooner than it typically would with new products, while CFO Susan Li said the company’s AI businesses could begin adding revenue in 2027 and become a meaningful source of diversification over time. The article describes Meta’s shift in investment toward AI, including advanced chips and data centres, as it competes with OpenAI and Anthropic. The company said it expects Reality Labs’ losses to narrow to about $15 billion next year as it redirects investment toward priority areas, primarily AI. Meta also introduced non-voting shares to help fund its expansion. Investors have responded to the AI product story, according to Investing.com analyst Jesse Cohen, but Meta’s spending has reduced its historically strong free cash flow, and some enterprises are restricting Muse’s access over security concerns. Meta shares fell more than six per cent at the start of Thursday trading as investors weighed mounting legal challenges. The article highlights a $25 billion penalty ordered by a New Mexico judge after a jury found that Meta misled residents about sharing user data with third parties and enforcing policies concerning hate speech and misinformation. The excerpt ends before giving further details about that penalty or other legal issues. Overall, the article presents Meta’s AI ambitions as a potential growth engine alongside significant investment costs, security concerns and legal exposure.