$Meta Platforms(META.US) first take: The performance in the third quarter is actually quite good, but as advertising experts have almost unanimously given high positive feedback on Meta's third-quarter performance, market expectations have been raised significantly. Compared to the latest expectations from investment banks, Meta is actually inline, and some indicators even slightly missed expectations. At high valuation levels, any small flaw may be magnified and discussed.

Specifically: (1) Total revenue grew by 19%, which is already quite impressive given the high base (only slowing down by 3 percentage points quarter-on-quarter), but some market expectations have directly raised it to a 20% year-on-year growth. For Q4 guidance, current market expectations, including relatively positive ones, are all around the median of the guidance range. Although the growth trend is still very strong when viewed alone, it can only be said to be basically in line with expectations; in the past, Meta often significantly exceeded expectations for this indicator.

(2) In terms of profitability, total operating expenses are expected to accelerate by 12%. Among them, R&D expenses increased by 21% year-on-year, further reflecting the investment cycle brought about by higher Capex and higher salaries for the expanded AI team. However, from the perspective of profit margins, like Google yesterday, it was also unaffected, with Q3 operating profit margin rising to 42.7%, the highest point since the business headwinds in 2022. While investing heavily, Meta has hedged profitability pressure through stronger commercialization on the business side. In other words, this investment is not like the blind investment in the RL department three years ago, but rather an efficient investment in AI advertising that can quickly realize monetization.

(3) However, the market may have some concerns about the pressure on profits from the scale of investment in 2025. Q3 Capex was 9.2 billion, which, although lower than expected, has raised the lower limit of the full-year Capex guidance, with the new range being 38-40 billion, implying that capital expenditures in Q4 will soar significantly (+72% to 98%). Currently, the market expects Capex in 2025 to be around 45 billion, with more aggressive estimates reaching 50 billion, an increase of about 15% to 28%. If we extrapolate based on the short-term trends of Q3 and Q4, then when the Q4 financial report provides guidance for the full year of 2025, the aforementioned market expectations for growth may not be able to hold.

From the perspective of depreciation and amortization expenses, since Q2 of last year, we have already seen an increase in expenses due to the earlier increase in Capex, with Q3 depreciation expenses accelerating by 40%. When this larger scale of Capex increase starting from Q2 2024 begins to gradually confirm in expenses, depreciation expenses are expected to accelerate as well, unless Meta extends the depreciation period. Meanwhile, the employee scale also began to show positive growth in the third quarter, so if revenue cannot continue to maintain high-speed growth, the pressure on profit growth next year may begin to emerge.