The Estimates

Consensus puts revenue at $63.41 billion, up about 24% year on year, inside a $61 billion to $64 billion range. That is slower than the 28% Meta (META.US) managed in the second quarter. Fiscal 2026 third-quarter results land after the US close. GAAP EPS averages $5.46 against a $6.36 median, within a $2.61 to $7.64 range. The adjusted mean is $6.80; one-off items explain the gap. Gross margin is seen at 79.9% versus 82.0% a year ago. Capex is pencilled at $40.7 billion, implying negative free cash flow of $9.66 billion.

Track Record

Revenue growth has not stalled, but the quality of earnings is changing. Year-on-year growth ran 26.2%, 23.8%, 33.1% and 28.0% over the last four quarters. Family of Apps still supplies more than 99% of revenue. Operating margin fell from 43.0% in the second quarter of 2025 to 34.8% a year later. Capex rose from $18.8 billion to $30.1 billion across that span. Free cash flow dropped from $10.9 billion in the first quarter to $0.6 billion in the second.

What to Watch

Muse needs numbers, not narrative — a take rate and a user count outrank the concept. JPMorgan said in late September the app, launched at Connect, could be the strongest consumer app since ChatGPT. Jefferies lifted its target to $875, and the late-September enterprise AI platform drew comment from BofA Securities and Citi. Capex is the second test. Goldman Sachs expects 2027 capex above $220 billion; BofA raised its forecast to $205 billion in mid-October. Another upgrade to this quarter's $40.7 billion would bring depreciation pressure on gross margin sooner. Legal charges are the third swing factor. BofA's mid-October preview cut its GAAP EPS estimate to $3.79, assuming about $10 billion of legal costs. New Mexico's $25 billion fine is under appeal, and reports point to a big cut.

Analyst Ratings

Street targets moved higher over the past month, and the end points are far apart. Goldman Sachs lifted its target to $860 from $725 on 14 October, keeping a buy rating. Morgan Stanley went to $820 from $775 on 19 October, still overweight. JPMorgan moved to $920 from $820 in late September, while BofA Securities and Citi held at $810 and $800. Susquehanna cut to $650 in late September. Against $697.52, the $920 target implies roughly 30% upside and $650 about 7% below. The split is over Muse monetisation speed and the capex path.

In Short

The market has priced certainty on revenue and left a cushion on costs. Watch whether capex guidance is raised again, whether Muse arrives with metrics, and how fast depreciation and legal costs squeeze margin. The revenue bar is low; negative free cash flow and a falling margin are the pricing points.