Meta shares drop 7% on AI spending and negative cash flow as Nasdaq has worst day since June

Meta Platforms reported third-quarter revenue of $64.60 billion, up 26% from a year earlier, and net income of $9.86 billion, which included a $9.89 billion legal charge tied to an August 2026 agreement with 52 state attorneys general over teen mental health and social media. It spent $34.91 billion on capital expenditure in the quarter and narrowed its 2026 capex outlook to $135-145 billion from $130-145 billion.Sources:1Meta: Meta Reports Third Quarter 2026 Results, Meta, 21 October 2026 (source, opens in a new tab)

Meta's free cash flow was negative $2.12 billion in the quarter, which Investing.com described as reportedly the first quarterly cash outflow since its 2012 listing. The board also approved a new listed, non-voting Class C stock from January 2027, to be issued as a one-for-one stock dividend; Meta said it would not change existing voting power, while analysts quoted by Investing.com said future share sales could dilute existing holders.Sources:1Meta: Meta Reports Third Quarter 2026 Results, Meta, 21 October 2026 (source, opens in a new tab)2Investing.com: Nasdaq posts worst day since June as AI financing worries batter risk sentiment, Investing.com, 22 October 2026 (source, opens in a new tab)3Business Today: Meta shares slide 7% as AI spending push drives capex higher, free cash flow turns negative, Business Today, 22 October 2026 (source, opens in a new tab)

Meta shares closed down about 7% on 22 October, and Business Today reported that the spread on Meta's five-year credit default swaps reached a record high. Microsoft, Oracle, Alphabet and Amazon fell between 2.2% and 4.6%.Sources:2Investing.com: Nasdaq posts worst day since June as AI financing worries batter risk sentiment, Investing.com, 22 October 2026 (source, opens in a new tab)3Business Today: Meta shares slide 7% as AI spending push drives capex higher, free cash flow turns negative, Business Today, 22 October 2026 (source, opens in a new tab)4Bloomberg: Meta Falls After Boosting Spending Plans for AI Bet, Bloomberg, 21 October 2026 (source, opens in a new tab)

The Nasdaq Composite fell 2.6% to 26,008.86, its worst session since June, and the S&P 500 lost 1.2% while the Dow was roughly flat. Chip stocks had their worst day since 23 June. Michael O'Rourke of Jones Trading called it "the most widespread selling of the AI trade we have seen all year". Tesla closed 3.1% lower after cutting its 2030 sales goal to 5 million vehicles.Sources:2Investing.com: Nasdaq posts worst day since June as AI financing worries batter risk sentiment, Investing.com, 22 October 2026 (source, opens in a new tab)