Meta's $64B Quarter Puts New Non-Voting Shares at the Center of Its AI Spending Spree

Meta’s massive capital expenditure for artificial intelligence is colliding with the need to preserve its current corporate governance structure. To bridge that gap, the tech giant has confirmed the creation of a new financial instrument designed specifically to raise capital without diluting the voting power of its existing base. This move allows the company to continue its heavy investment in AI infrastructure while keeping decision-making authority firmly in the hands of those who already hold Class A and B shares.

The announcement came alongside the company’s third-quarter earnings report on Wednesday. Chief Financial Officer Susan Li stated that Meta plans to create a new class of non-voting capital stock. This new equity will be distributed to all existing shareholders through a stock dividend. Li explained that the primary purpose of this new share class is to create a publicly traded non-voting stock that can be used for capital raising, employee compensation, and acquisitions. This approach preserves the voting power of existing shareholders while expanding the company's funding tools.

Li emphasized that this structure allows Meta to maintain its founder-led governance model. She noted that the new shares provide the flexibility needed to invest in the "unprecedented momentum" driven by AI across the business. By separating voting rights from economic value, the company aims to streamline its ability to fund growth without triggering the governance complexities often associated with standard stock offerings.

Financially, Meta posted a strong quarter, beating Wall Street expectations with revenue of $64 billion. This represents a 26% increase from the same period a year earlier. However, the rapid growth came with a price tag, as costs and expenses surged by 68% year-over-year. Despite the top-line success, the Reality Labs division, which oversees AR glasses and VR headsets, continues to operate at a loss, though the deficit is shrinking compared to previous years. The company projects that Reality Labs losses will narrow to between $18 billion and $19 billion, down from its 2025 levels.

The push into AI has been a central focus for the company over the past year. Meta has released several models, including Muse Spark and Muse Glimmer earlier in the year. In recent weeks, it added Muse Wonder and Muse Spark Open, an open-weight model that allows outsiders to access and build upon its underlying parameters. The company also launched Muse Code, a coding agent for software developers. At its Meta Connect event, the firm introduced a line of avatars for its AI assistant, Meta Muse, aiming to make the technology feel more relatable and accessible.

User adoption of these new tools appears robust. CEO Mark Zuckerberg stated on the earnings call that more than 10 million people in the U.S. and Canada have set up Muse personal agents in just a month and a half. He described the growth as strong, noting that the product has been number one in the App Store almost every day. Zuckerberg indicated that with clear product-market fit, the company is entering a new operational phase focused on scaling the service to eventually serve billions of people.

Despite the optimistic outlook on AI adoption, the company acknowledged ongoing regulatory and legal challenges. Li noted that Meta continues to monitor active legal and regulatory matters that could significantly impact its business. Specifically, the company faces scrutiny regarding youth-related issues in several markets. Several youth-related trials are scheduled in the coming months in the United States, posing a potential headwind to the otherwise positive financial narrative.