Mark Zuckerberg is sticking to the plan, mostly. His company’s multiple increasingly depends on it.

In its after-the-bell third-quarter earnings report on Wednesday, Meta said it’s raising the lower bound of its capital expenditures guidance for the year, from $130 billion to $135 billion, but keeping its top-end projection steady at $145 billion. That’s calming music to the ears of Wall Street, which has had trouble sleeping lately due to AI bubble fears and mounting capex spending. Meanwhile, the rapid adoption of Meta’s AI agent Muse shows demand for AI is growing, theoretically justifying the massive capex plans. Shares of the company jumped as much as 6% in after-hours trading following the report featuring 26% year-over-year revenue growth, though significant revenue from the mostly free-to-use Muse remains almost purely theoretical.

First Muse-r Advantage

Of course, the AI agent only launched on Sept. 8, mere days before the end of the quarter on Sept. 30, meaning it had scant time to show up in the quarterly report anyhow. From an adoption standpoint, however, Muse has been a smashing success, scoring 10.9 million downloads since launch, according to SensorTower data. That’s far faster than the 123 days it took OpenAI’s ChatGPT to cross the 10 million download mark (downloads for Sam Altman’s chatbot, by the way, have dropped by 25% since Muse burst onto the scene).

That still doesn’t mean Muse’s fingerprints will be all over Meta’s quarterly reports to come, either. “This will take some time,” Zuckerberg said in a call with analysts following the report, though he did predict Muse’s revenue per user will eventually exceed that of Instagram or Facebook users and said the company may begin taking a small cut of transactions facilitated by the agent. How big of a business that is, and how soon Meta will face serious competition, both remain anyone’s guess:

• Deutsche Bank analyst Benjamin Black recently predicted that Muse’s 2030 revenue could range anywhere from $2.4 billion to $36 billion, the latter marking roughly 8% of the company’s annual revenue. Bank of America analysts said Muse “will consume capacity w/o near-term [revenue]” through at least next year.
• Citi analysts predicted earlier this month that Muse could generate $27 billion annually by 2030 and said it benefits from “first-mover advantage.” OpenAI’s Dots agent, launched weeks after Muse, remains restricted to high-paying users, while Apple’s revamped Siri AI and Google’s Gemini Spark still lack many of Muse’s agentic capabilities. The winner may ultimately be whichever agent is most trusted with credit card privileges.

Split Decision: Zuckerberg said compute remains the biggest constraint to Muse’s global rollout, which is why the company is spending so much on data centers. It has a new plan to pay for them too, saying it will issue one nonvoting Class C share for each Class A and Class B share held in January, marking an effective two-for-one stock split, to fuel its investments. It may need to consider a similar plan to foot its legal bills, too: A nearly $10 billion hit weighed on its quarterly results, while a New Mexico judge ruled Wednesday that the company must pay a $25 billion penalty in a case stemming back to the Cambridge Analytica scandal.

Feeling guilty about not meeting 2026 goals? Don’t look at Wall Street. The five biggest investment banks have already beaten last year’s record for equity trading revenue by about $7 billion, a CNBC analysis found.

Three of them — Goldman Sachs, JPMorgan Chase and Morgan Stanley — hauled in $52 billion of the top five’s $67 billion in equities revenue through September, nearly 80% of the total. Goldman Sachs is leading the pack: Its equities revenue grew 57% this year to more than $19 billion, edging out Morgan Stanley (~$17 billion) and JPMorgan (~$15 billion). Bank of America’s and Citigroup’s totals meanwhile were in the single digits.

Looser leverage rules are helping banks do more business with hedge funds, which are looking for new funding to finance their AI bets.

Insatiable Hedge Funds

Hedge funds are hungry for financing, making prime brokerage big biz for banks. Goldman Sachs saw equities financing surge 96% last quarter. JPMorgan CFO Jeremy Barnum said in the company’s third-quarter earnings call that one analyst’s point about “insatiable demand for capital” felt about right to him.

That appetite could be a cause of concern. Too much leverage could make an AI bust, if one comes, swift and severe:

• Hedge fund assets grew to $13 trillion earlier this year, the International Monetary Fund estimated this month, up from $4 trillion in 2013. Most of that growth came from leverage, which the IMF warned could make markets more volatile under stress. JPMorgan CEO Jamie Dimon told CNBC in August that margin debt was the highest it’s ever been, pointing in part to hedge funds and prime brokerage.
• Hedge funds did pare back some leverage last week, dumping tech stocks at the fastest pace in at least a decade, according to Goldman Sachs. Their net leverage hit a one-year low. Still, tech made up nearly a quarter of what Goldman’s hedge fund clients held as of Oct. 15.

Too Big To Care: Hedge funds are well aware of the risks associated with leverage. The collapse of Situational Awareness this summer showed what happens when leveraged bets go sideways. Its highly leveraged AI trades blew up during July’s chip-stock rout, and other smaller hedge funds struggled alongside it. The banks that funded those trades could handle the hit. A full-blown AI bust could be a different story, but so far, the pain has largely stayed on the hedge funds’ side.

It was a long way back, but oil shipments in the Middle East are above prewar levels. Preliminary estimates from Kpler cited by The Wall Street Journal Wednesday suggest regional flows hit roughly 24 million barrels per day last week, passing the prewar 23.3 million. Kpler estimates that 40% of crude shipped out of the Persian Gulf now avoids the war-torn Strait of Hormuz, flowing through alternate routes and pipelines at more than double prewar levels.

That’s not to say everything’s back to normal. International benchmark Brent crude closed up 1% on Wednesday at $109.87 in the latest sign that rebalancing global energy markets will not be easy.

Pump and Circumstances

Since the US-Iran war first disrupted energy flows in the Strait of Hormuz in February, the Trump administration has gone deep into its policy toolkit to try and neutralize the resulting surge in energy prices. The US released emergency reserves, lobbied allies to do the same, relaxed gasoline standards, waived restrictions on foreign-flagged vessels delivering oil to US ports and most recently struck a controversial diesel deal with sanctioned Russia. Your latest gas station receipt can tell you how that’s gone.

Even with Middle East oil shipments above prewar levels, the conflict will hurt at the pump until it’s resolved. “The fact that oil prices are well supported despite the improvement in flows from the region appears to reflect concerns over how sustainable this supply is, particularly when considering the geopolitical backdrop,” said Warren Patterson, head of commodities strategy at ING. “To see this risk premium erode, the market may need the comfort of a deal.” Washington and Tehran are in indirect talks, Iran’s foreign minister said Wednesday, but Iran continues to attack tankers in the strait and its Houthi militant allies in Yemen have been striking energy infrastructure in Saudi Arabia. The risk premium remains.

Another crucial factor is that, even though crude flows are back, the market for refined products remains mired in bottlenecks. That means expensive gas, diesel, jet fuel, and other petroleum products. The International Energy Agency said last week that refined product shipments out of the Middle East “remain below half of their prewar levels.” US oil refiners are working at full tilt, and US Secretary of State Marco Rubio met with India’s largest refiner about taking on more Western crude on Wednesday. But with capacity dented by the war, the IEA expects constraints on refined fuel supplies to “persist well into 2027.” Regional leaders share concerns:

• Nawaf Saud Al Sabah, the head of Kuwait’s state oil company, told the Dow Jones Energy Conference in New York on Wednesday that his country has idled 600,000 barrels of daily refining capacity because there aren’t enough tankers willing to take it. A total of 6 million barrels per day of refining capacity is still offline in the Gulf.
• Al Sabah said new pipeline and storage infrastructure can’t replace an open Strait and, according to Dow Jones, urged foreign governments and companies to do more to secure energy trading: “It cannot be a producer risk that is borne completely.”

Picking Up The Tab: The average price of a gallon of gasoline in the US was $4.26 yesterday, up roughly 40% year over year, according to AAA. Diesel, at $6.31, was up 74%. “Americans have now cumulatively spent $138.8 billion more on gasoline and diesel since March 1st,” Patrick De Haan, head of petroleum analysts at Gasbuddy, said this week. “That’s roughly the same as buying 337,897 homes at the median US home price of $410,700 each, housing a population of 845,000-860,000 people — similar to Indianapolis.”