Based on 31 recent Meta articles on 2026-11-01 09:49 PST

Meta’s AI Is Strengthening Ads as Spending and Scrutiny Mount

• Meta’s third-quarter ad revenue rose 26% to $63.1 billion, outpacing Google Search’s 12% growth and nearly matching its revenue.
• Meta says its AI ad tools are improving campaign results, while its Andromeda system is designed to process a much larger pool of ads with greater efficiency.
• S&P kept Meta’s AA- rating but changed its outlook to negative, citing heavy investment, negative cash flow and uncertainty about AI returns.
• Meta is seeking $95 billion in equity financing as it expands AI infrastructure, with S&P forecasting capital spending above $225 billion in 2027.
• Muse has attracted more than 10 million users in the United States and Canada, but reported commerce activity remains limited at many businesses and Amazon blocks the agent.
• UK regulators are scrutinizing Meta’s proposed use of publisher content, while a court upheld Ofcom’s authority to demand online-safety data and a New Mexico judgment adds to legal exposure.

Meta’s strongest near-term evidence for AI returns is in advertising, where third-quarter revenue grew 26% to $63.1 billion, compared with 12% growth for Google Search and other revenue. Meta says nearly 10 million advertisers used at least one of its AI tools, and that users of recommendations from its business assistant generated more conversions and increased spending. Its Andromeda ad-retrieval system is another attempt to turn AI investment into measurable performance, with Meta reporting a 2.4% increase in Facebook conversions since 2025 2. The results sharpen the contrast with Google, whose search queries reached a record even as revenue growth slowed, amid concerns that AI answers could reduce visits to conventional search results.

That operating momentum is colliding with the cost and financing demands of Meta’s AI buildout. S&P lowered its outlook to negative while maintaining the company’s AA- rating, saying leverage could rise and that the timing and scale of AI monetization remain uncertain . Meta’s own 2026 capital expenditure guidance is $135 billion to $145 billion, while S&P’s forecasts put spending at about $140 billion this year and above $225 billion in 2027; the latter figures are agency projections, not company guidance. Meta’s planned $95 billion equity raise underscores the scale of its financing needs, even as the company argues that AI is improving engagement, recommendations and business results.

Meta is also positioning Muse as a route to growth beyond advertising, particularly in shopping and task automation, but early adoption has not yet demonstrated a material commercial shift. More than 10 million people in the United States and Canada reportedly created Muse agents during its first six weeks, and Meta says over a quarter of users tried shopping with the tool; however, several companies describe agent-driven orders and bookings as small or insignificant so far 4. The push has exposed a strategic divide: Walmart is working with Meta on agent-led commerce, while Amazon has blocked Muse from purchases on its platform and says it has seen no meaningful effect on its advertising business. A reported humanoid robot prototype called Max extends the ambition to physical tasks, but Meta says it has no launch timeline and does not plan to sell the prototype 5.

At the same time, Meta faces mounting disputes over its control of platform access and content. The UK Competition and Markets Authority opened an investigation into proposed terms that could let Meta use material from publishers’ and businesses’ websites for its products, including AI features; Meta paused the rollout while consulting stakeholders, and the inquiry has not found a violation 6. Separately, the High Court rejected Meta’s challenge to Ofcom’s requests for detailed online-safety data, strengthening the regulator’s ability to gather information under the Online Safety Act 7. A New Mexico judge’s $25 billion judgment over alleged longstanding privacy violations adds another significant legal risk, though Meta may challenge the ruling 8.

Taken together, the developments show a company trying to convert its vast user base and advertising infrastructure into a broader AI platform while accepting unusually high upfront costs. The advertising business is producing tangible gains, but the case for agents, robotics and other new products remains more prospective, and Meta still derives 98% of its sales from advertising. Investors therefore face a timing question: whether today’s spending builds durable advantages before cash-flow pressure, competition and regulatory constraints become more consequential. That question is complicated by Google’s own AI investments and by the possibility that AI could strengthen Meta’s ad targeting while disrupting the search behavior on which a rival’s business depends.

Concluding Thought

Meta’s AI strategy has begun to show commercial results in advertising, but those gains do not yet settle whether its expanding infrastructure and product bets will earn adequate returns. The next test is whether tools such as Muse can move from early user interest to meaningful transactions and recurring revenue without undermining relationships with retailers and content providers. Credit ratings, cash generation and regulatory outcomes will remain important measures of whether the company can sustain its ambitions while protecting the business that currently funds them.