Meta Platforms (META) reports earnings on Oct. 21, and the number that matters most might not be the one at the top of the release. It's the one about how much money the company plans to spend.
Bank of America expects Meta to report third-quarter revenue of $63.8 billion, above the $63.3 billion consensus estimate. The bank also forecasts fourth-quarter revenue of $74.1 billion, ahead of the $73.6 billion market estimate, as AI-driven improvements in advertising support growth.
But the spending required to sustain that growth could complicate the outlook for technology-heavy ETFs.
The bigger concern is the scale of Meta's AI infrastructure spending. Bank of America expects 2026 capital expenditure of $140 billion to $145 billion and projects it could reach $205 billion in 2027. Investors will be looking for evidence that stronger advertising returns can justify those costs.
Three ETFs to watch
Meta exposure across selected funds:
First Trust Dow Jones Internet ETF (FDN): With a portfolio weight of 11.04% toward Meta
Roundhill Magnificent Seven ETF (MAGS): With a portfolio weight of 14.26% toward Meta
Invesco QQQ Trust (QQQ): With a portfolio weight of 3.37% toward Meta
MAGS offers exposure to the Magnificent Seven stocks, making Meta's earnings particularly relevant to the fund's performance. A strong advertising outlook could reinforce investor confidence in the group's AI monetization potential, while concerns about rising infrastructure costs could weigh on sentiment toward these mega-cap technology stocks.
FDN provides more concentrated exposure to internet businesses, including companies whose revenues depend on digital advertising and online engagement. Meta's results could therefore influence sentiment toward the broader internet sector, particularly if management provides fresh evidence that AI is improving advertising efficiency and monetization.
QQQ, meanwhile, tracks the Nasdaq-100 Index and offers broader exposure across major non-financial Nasdaq-listed companies. Although Meta accounts for a smaller 3.37% of its portfolio, its earnings could still affect the fund through its direct stock exposure and the broader implications for AI-related investment and technology valuations.
The distinction matters for investors. MAGS has the greatest direct sensitivity to Meta among these three funds based on the supplied weights, FDN offers a more focused internet-sector angle, and QQQ provides broader technology and growth-stock exposure. However, actual performance will also depend on how other portfolio holdings perform and how markets interpret Meta's results.
The Earnings Risk for ETF Investors
Meta's earnings-per-share figure may also require careful interpretation. Bank of America expects $3.79, against the $6.08 consensus, partly because of a one-off $10 billion legal settlement charge. The bank expects operating income to exceed market expectations after excluding that charge.
For ETF investors, the key signals will be fourth-quarter revenue guidance, evidence that AI is improving ad targeting and engagement, and management's outlook for infrastructure spending. A stronger advertising outlook could reinforce the AI growth narrative, but accelerating costs without corresponding revenue gains could pressure valuations across technology-heavy portfolios.
