Key Highlights

● Meta reported record third-quarter revenue of $64.6 billion.

● Meta's 2026 capital spending range now stands at $135 billion to $145 billion.

● The Nasdaq Composite lost about $1 trillion in market value on Thursday.

● About two of every three S&P 500 stocks rose as money rotated.

Meta Platforms reported record quarterly revenue on Wednesday evening. By Thursday, October 22, it had set off one of the sharpest tech selloffs of the year. Meta (NASDAQ:META) was trading at $648.85, its worst day since July, after investors focused on how much the company is spending on artificial intelligence and how it will pay for it.

The Nasdaq Composite fell 694 points to 26,008.86, its steepest drop since June 5, and lost about $1 trillion in market value. The S&P 500 dropped 93.74 points to 7,663.43, its worst day since July.

What Meta reported

The headline numbers were strong. Third-quarter revenue was a record $64.6 billion, and fourth-quarter revenue guidance of $73 billion to $76 billion came in above consensus. The quarter included a legal charge of about $10 billion tied to a settlement, according to reports.

But spending dominated the conversation. Meta raised the low end of its 2026 capital expenditure range, which now stands at $135 billion to $145 billion. Free cash flow was negative $2.12 billion, its first cash outflow in more than a decade. Future lease and contract commitments rose to about $825 billion from about $700 billion in July.

Meta also announced a one-time dividend of one non-voting Class C share for each Class A and B share, effective January 19, 2027, according to its SEC filing. Some observers saw it as a way to help fund AI spending. The cost of insuring Meta's debt hit a record.

"We don't have any specific financing plans to announce at this time," CFO Susan Li said.

From one company to the whole trade

The worry quickly spread: if even Meta's cash flow turns negative, how will smaller AI players finance their ambitions? Nvidia (NASDAQ:NVDA) CEO Jensen Huang added to the anxiety, saying "The demand of the capital is much greater than the availability of the capital." Nvidia was trading at $212.21 and was the single biggest drag on the S&P 500.

CoreWeave (NASDAQ:CRWV) sank to $55.60, a 17-month low. One analyst cut her price target to $51 from $74, estimating the company needs about $85 billion to fund its backlog. Oracle (NYSE:ORCL) fell on AI-financing and credit worries.

Power stocks tumbled too. GE Vernova (NYSE:GEV) was among the three worst S&P 500 names. IBM (NYSE:IBM) CEO Arvind Krishna said customers are "getting worried if some of the AI spending is completely out of control with no real return."

Analysts' views

Many analysts stayed constructive on Meta. One brokerage raised its price target to $940 from $920 with an Overweight rating, and another lifted its target to $845 from $810 with a Buy rating. "In our view, Meta is entering a capex harvest cycle," one analyst said.

Mark Zuckerberg struck an upbeat tone: "Our investments are paying off, the core business is strong, and we're seeing velocity across the board."

Where the money went

Investors rotated rather than fled. About two of every three S&P 500 stocks rose. Staples posted their best day since April 2025, and Treasuries rallied, sending the 10-year yield back below a closely watched threshold.

Peers Face the Funding Question Next

The financing question now shifts to Meta's peers. Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) report on October 28, the same day as the Federal Reserve decision, and Amazon (NASDAQ:AMZN) follows on October 29. Their spending plans and any comments on funding will show whether Thursday's scare deepens or fades.