Meta stock drops more than 6% despite strong Q3 results, stock split

Meta ( META ) stock plunged more than 6% on Thursday, despite reporting better-than-anticipated Q3 revenue results after the bell on Wednesday.

The declines come as i nvestors continue to pull back on semiconductor and other AI stocks amid ongoing concerns about data center spending and returns on massive AI investments.

Meta raised the lower end of its capital expenditure estimates to between $135 billion and $145 billion from $130 billion and $145 billion. The company also has $825 billion in various spending commitments related to cloud capacity arrangements, energy service agreements, and consumer hardware products.

Despite Wall Street's reaction to Meta's earnings, analysts were largely bullish on the company's outlook, owing to its prospects for its Muse AI agent and models.

CEO Mark Zuckerberg repeatedly pointed to Muse as a source of growth potential during the company's earnings call, saying "Muse will be highly profitable over multiple years," as long as compute efficiency in AI systems continues to improve.

Meta posted an all-time high revenue of $64 billion in the quarter, well ahead of the $63.3 billion analysts anticipated. GAAP earnings per share came in at $3.83 versus expectations of $3.56, but would have been $7.40 without legal charges related to the company's teen mental health settlement.

The company also announced it will issue new non-voting Class C shares to all Class A stockholders , effectively creating a 2-for-1 stock split. The move is meant to ensure Zuckerberg stays in California and retains voting control of the company if the state's Proposition 40 passes on Election Day.

Prop. 40 calls for a 5% tax on taxpayers with assets over $1 billion.

Ahead of Meta's earnings report, a New Mexico judge ordered the company to pay $25 billion in connection with the state's consumer-harms case against the social media giant.

Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley .