Meta spent more money in the quarter than its business brought in, and the stock plunged 7%. But look what 23 investment firms did that same day
There are reports the market reads in one line. Meta's report this week is one such report: according to reports, for the first time in over a decade the company burned cash. But when we connected the dots, we found that Wall Street read the same report completely differently from the negative headlines. And there's another layer almost no one connects: every dollar Meta "burned" went into someone else's pocket.
What happened in the report? On October 21, Meta published its Q3 results. Revenue increased by 26%, to $64.6 billion. So far, excellent. But in the same quarter, it invested $34.9 billion in data centers and equipment, while its operations brought in only $32.8 billion.
What does this mean simply? "Free cash flow" is the money left to a company after it pays for its investments. For Meta, this quarter, nothing was left: the flow was negative, minus $2.1 billion. It's important to clarify: this is not a company in trouble. Meta has $82.5 billion in cash and securities. It simply chooses to invest every dollar in AI.
And on the trading day after? The stock fell by about 7%, from $697.52 to $648.85.
And now for the part that didn't make headlines that same day, 23 investment firms published an update on Meta. We checked all of them in our data: 17 of them raised their price target. Only 3 lowered it, and the rest did not change. Mizuho raised from $750 to $950. Susquehanna raised from $650 to $850. According to our data, these are two price target changes that rank in the top ten out of 1,173 price target changes in the stock's entire history.
Meaning: the market saw cash being burned, and investment firms saw an investment that would pay for itself.
And here's the part no one connects: $34.9 billion in one quarter doesn't disappear. They go to suppliers. And think about this: according to Meta, investments for all of 2026 will reach $135 to $145 billion. And who gets the money? Here are three links we checked in official documents:
- Broadcom ($AVGO): In April, Meta announced that Broadcom would develop its AI chips with it, with an initial commitment of more than a gigawatt.
- Arista ($ANET): according to its annual report, Meta and Microsoft each account for more than 10% of its revenue, the network equipment that connects data centers.
- Nvidia ($NVDA): the processors on which AI models run.
And here's the irony: on October 22, the suppliers also fell along with Meta. Arista lost about 7.2%, Broadcom about 4.3%, and Nvidia about 4.4%. That day, the market sold off both the one spending the money and the ones receiving it.
It's important to qualify: large spending does not guarantee that suppliers will continue to benefit forever. If Meta decides to cut back, they will be the first to feel it. But as of today, Meta says the opposite: according to the report, it intends to continue investing "aggressively" next year as well.
In the end, the question is not how much money Meta is burning but whose pocket that money is going into.