1. Meta's core advertising business continued to strengthen in Q3: revenue reached $64.6 billion, a year-over-year increase of 26.1%, with advertising revenue increasing by 25.9%. AI has begun to generate quantifiable returns, with over 10 million advertisers using generative AI tools. Advertisers using AI Business Assistant recommendations saw conversion rates increase by approximately 5% and advertising spending increase by approximately 9%.
2. Muse has accumulated approximately 10 million downloads in the US and Canada, with over 25% of weekly active users using it for shopping, and an average purchase amount exceeding $200. However, its independent business model is still in its early stages.
3. The biggest pressure comes from AI capital expenditures. Goldman Sachs projects expenditures of $141.2 billion and $230.3 billion in 2026 and 2027, respectively, with free cash flow potentially turning negative in 2027.
4. Overall, despite lowering short-term EPS, Goldman Sachs remains optimistic about the long-term monetization of advertising, Muse, and AI, expecting revenue to maintain double-digit growth from 2026 to 2028. Therefore, it maintains a "Buy" rating and raises its target price from $860 to $885. (Goldman Sachs report, October 22)
