Meta reported a 26 percent jump in revenue on October 21 and beat the top of its own forecast range. The number that moved the argument about artificial intelligence spending was a different one. Capital expenditure for the quarter was $34.91 billion, against $32.79 billion of cash generated by the business, which left free cash flow at minus $2.12 billion, according to Meta's results release. A year earlier, free cash flow was positive $10.63 billion.

The cash line

Meta's own definition of capex includes principal payments on finance leases. On a simpler basis, equipment bought outright was $33.94 billion, which still exceeded operating cash flow. That is a first since 2012 in the fundamentals records of the data provider StockTitan, which compared the quarter with Meta's history back to 2011.

The gap has opened quickly. In the second quarter of 2026, capex of $31.1 billion was only slightly below operating cash of $31.9 billion, according to StockTitan's tables of Meta's releases. For all of 2025, Meta spent $72.2 billion. It now expects $135 billion to $145 billion this year, narrowed from $130 billion to $145 billion in July.

The arithmetic for the rest of the year is stark. Meta has spent $85.8 billion so far in 2026, by StockTitan's sum, so hitting the low end of guidance implies about $49 billion in the fourth quarter, and the high end about $59 billion. For 2027, Meta said only that it will continue investing aggressively and has not put a number on it.

An income statement that tells a different story

Revenue was $64.6 billion, above the $61 billion to $64 billion range Meta gave in July, and the company guided to $73 billion to $76 billion for the fourth quarter. Advertising was $63.06 billion of the total.

Profit was messier. Operating income fell 37 percent to $12.99 billion and the operating margin dropped to 20 percent from 40 percent, largely because of a $9.89 billion charge for a settlement with state attorneys general over teen safety. Reported earnings per share of $3.83 compare a quarter with a legal charge against a year-ago quarter with a tax charge. Excluding those, Meta's adjusted figure was $7.40 versus $7.25, which is roughly 2 percent growth on 26 percent sales growth, by StockTitan's calculation.

Both views are true. The advertising business is growing fast. It is simply not growing as fast as the bill for building the machines.

How the build is being paid for

Cash and marketable securities fell to $82.45 billion from $90.26 billion at the end of June. Long-term debt stood at $80.92 billion, against $58.74 billion at the end of 2025, after Meta borrowed $24.91 billion in a bond sale in May. It has repurchased no shares in 2026, after spending $26.25 billion on buybacks in the first nine months of 2025, while still paying dividends.

Leases are the bigger commitment. Meta disclosed about $279 billion of leases that have not yet started as of June 30, plus roughly $68 billion more signed in July, per its quarterly filing as summarized by StockTitan. Together that is around $347 billion over terms of up to 30 years, equal to about 1.4 times a year of Meta's revenue.

In July, finance chief Susan Li said operating cash flow remained the main pillar for financing the company's ambitions, while also pointing to bond sales and data-center partnerships, according to the call transcript. One quarter later, the pillar no longer covers the whole build alone.

The new share class

The company's other announcement points to what could come next. Meta plans to issue a new class of stock, Class C, with no vote. Every Class A and Class B holder would receive one Class C share for each share they own, alongside what Meta calls the effect of a two-for-one split in Class A. The change is scheduled for January 19, 2027, according to the release.

Meta says the class can be used to raise capital, compensate employees and fund acquisitions, and that the scale of investment needed in the AI transformation is significant. Its information statement says the change will not initially alter any shareholder's economic interest or voting power. A class with no vote means new shares can be sold without diluting control, which is the point. In July, an analyst asked whether Meta would use equity to fund investments, and Li said the company would evaluate all financing options when planning 2027.

Sources link the change to keeping Mark Zuckerberg in control. That is a governance story in its own right and sits outside the scope of this piece. For investors in the financing story, the relevant detail is that a company with $82 billion in cash has just created a way to raise equity without giving up votes.

Not just Meta

Meta is the first of the four big spenders to report. Alphabet, Microsoft and Amazon follow in the coming days, and the four combined had called for roughly $730 billion of capital spending this year, CNBC reported. By StockTitan's calculation, equipment purchases already exceeded operating cash flow at Amazon (119 percent) and Alphabet (115 percent) in April to June, while Microsoft was at 65 percent. All four figures exclude leased equipment, so heavy lessors look lower than they are.

This is the financing side of a boom whose demand side is visible elsewhere, as in TSMC's record profit and a fourth-quarter guide built on AI orders. It is also what investors reacted to when AI debt fears hit the Nasdaq. When the biggest cash generators in technology need debt, leases and potentially new equity to fund the build, the question shifts from whether demand exists to who pays for supply.

What to watch

Three numbers will tell the story. The first is the fourth-quarter capex that Meta has implicitly promised, between about $49 billion and $59 billion. The second is whether Alphabet, Microsoft and Amazon raise their own guidance or hold it. The third is what Meta says about 2027 spending when it finally puts a number on it.

If those figures keep rising while free cash flow stays negative, a quarter in which Meta beat its revenue guide could be remembered for something else: the point at which the AI build stopped being funded out of profits.

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