One of President Donald Trump’s former institutional enemies will face a $16 billion hit in the third quarter, all thanks to the Big Beautiful Bill omnibus package passed over the summer.
According to Reuters, Facebook and Instagram parent company Meta saw virtually all of its third-quarter income wiped out thanks to a one-time hit by the way taxes are calculated under the BBB.
While Meta will see lower taxes in the future, the implementation “led to the recognition of a valuation allowance against our U.S. federal deferred tax assets, reflecting the impact of the U.S. Corporate Alternative Minimum Tax,” which “includes a one-time, non-cash income tax charge of $15.93 billion,” according to a company media release.
Instead of being able to record a net income of $18.64 billion, therefore, the company’s net income was $2.71 billion, despite revenue growth of 26 percent. That’s an 83 percent hit.
Also dragging down profits was a 32 percent increase in costs, largely a reflection of Meta coming late to the artificial intelligence game and spending increasingly large sums of money to play catch-up.
CEO Mark Zuckerberg is increasingly betting on AI superintelligence, which Reuters notes is “a theoretical milestone where machines outthink humans.” That goal has already eaten hundreds of billions of dollars for constructing new data centers with more to come, the company said.
“There’s a range of timelines for when people think that we’re going to get superintelligence,” Zuckerberg said on a conference call with financial analysts.
“I think that it’s the right strategy to aggressively front-load building capacity, so that way we’re prepared for the most optimistic cases.”
While the tech giant’s stocks had been up 28 percent this year so far, they fell 8 percent after the bell.
Should Trump have forgiven the tech barons as quickly as he did?
Jeremy Goldman, a senior director at Emarketer, told Reuters that Meta’s bet on AI may still pay off even if superintelligence doesn’t arrive on schedule or at all.
“After a few years of existential hand-wringing, the company has found its rhythm again by doing what it does best: scaling attention and monetizing it with ruthless efficiency,” Goldman said.
“While everyone else is still pitching AI moonshots, Meta has quietly turned AI into margin. Its ad tools are sharper, its targeting smarter, and its short-form video business is finally paying off.”
However, the higher costs combined with the hit from the BBB still apparently had Wall Street worried, as evinced by the short-term stock losses.
Trump, who signed the BBB in July, was banned by Facebook and Instagram, along with other major social media platforms, after the Jan. 6, 2021 Capitol incursion.
Trump would later go on to sue Meta, Twitter, and Google over the suspensions. The suit with Meta would later be settled.
In January of 2023, Meta announced that he would be allowed back onto the platforms, albeit with “guardrails” on the then-former president’s account. However, at that point, Trump — already a candidate for the 2024 presidential election — had moved almost all of his activity to his own platform, Truth Social.
In July of 2024, long after Trump had clinched the Republican nomination for president, Meta took those “guardrails” off, noting that Trump had done nothing to attempt to violate them.
“In assessing our responsibility to allow political expression, we believe that the American people should be able to hear from the nominees for President on the same basis,” said Nick Clegg, Meta’s president of global affairs.
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