UPDATE 2-Facebook parent Meta projects sharp acceleration in AI costs after results beat Wall Street targets

Recasts with costs, updates share move, adds financial details

By Katie Paul and Akash Sriram

Oct 30 (Reuters) - Facebook owner Meta Platforms META.O beat analysts' estimates for third-quarter revenue and profit on Wednesday, but warned of "significant acceleration" in infrastructure expenses related to its artificial-intelligence buildout, sending mixed signals about whether higher digital ad sales from its core social media business would continue to cover its massive AI investments.

Shares of the Menlo Park, California-based firm fell 2.5% in after-hours trading.

The world's biggest social media company reported third-quarter profit of $6.03 per share, compared with estimates of $5.25 per share, according to data compiled by LSEG. Third-quarter revenue stood at $40.59 billion, compared with analysts' estimates of $40.29 billion.

The company also forecast between $45 billion and $48 billion in fourth-quarter revenue, compared with analysts' estimates of $46.31 billion, according to data from LSEG.

Advertising accounts for the vast majority of Meta's revenue, meaning higher marketing spending during the holiday season could provide a crucial boost to the company's bottom line, according to analysts.

Meta's earnings come after encouraging results from digital ad bellwethers Alphabet GOOGL.O and Snap SNAP.N, which both beat third-quarter revenue estimates on Tuesday thanks in part to rising sales of AI-assisted ads.

Like its Big Tech peers, it has invested heavily in data centers to capitalize on the generative AI boom. Unlike providers of cloud services, however, it does not expect to earn money from those investments right away and therefore is more subject to scrutiny from investors around its spending.

The company kept costs in check in the third quarter, with total costs of $23.2 billion and capital expenditure of $9.2 billion. It projected a slightly improved expense picture for the year as well, narrowing its total expense forecast to $96 to $98 billion.

In its press release, however, it warned of "a significant acceleration in infrastructure expense growth next year as we recognize higher growth in depreciation and operating expenses of our expanded infrastructure fleet."

(Reporting by Akash Sriram in Bengaluru and Katie Paul in New YorkEditing by Maju Samuel, Peter Henderson and Matthew Lewis)

((Akash.Sriram@thomsonreuters.com; On X as @HoodieOnVeshti; +91-74116-87774;))