Meta stock surges 10% as revamped AI strategy delivers strong fourth-quarter financial results

Meta set to report earnings: Update on revamped AI strategy is key to fourth quarter

Meta on Wednesday will report fourth-quarter earnings, and investors will be looking for any signs that its revamped artificial intelligence strategy will benefit the company in 2026. Here's what analysts polled by LSEG are expecting: * Earnings per share: $8.21 estimated * Revenue: $58.35 billion estimated Meta spent a large chunk of 2025 overhauling its AI unit, including investing $14.3 billion in Scale AI to land the startup's founder, Alexandr Wang, and several of his colleagues. Wang oversees Meta's top-tier TBD unit that is tasked with developing powerful AI models. The company set up TBD after its Llama 4 model launched to tepid response from developers last spring. Meta has been testing a new frontier model and Llama successor code-named Avocado, and plans to release it during the first half of the year, CNBC reported. Underpinning Meta's AI efforts has been a major data center build-out while rivals like OpenAI and Alphabet do the same. Meta on Tuesday said it committed to paying glass manufacturing giant Corning up to $6 billion through 2030 for fiber-optic cable in its AI data centers. Although investors have been spooked by Meta's costly artificial intelligence investments, CEO Mark Zuckerberg has characterized the moves as necessary given AI's rapid pace of development. "Being able to make a significantly larger investment here is very likely to be a profitable thing over, over some period," Zuckerberg told analysts in October. Meta's capital expenditures, related to its data center push, are projected to come in at $21.97 billion for the quarter, according to StreetAccount. The company is expected to report $56.98 billion in online advertising sales for the fourth quarter, according to StreetAccount. Wall Street expects fourth-quarter daily active people to come in at 3.58 billion. Investors will also be monitoring what Zuckerberg has to say about the company's Reality Labs unit, which builds the virtual reality, augmented reality and wearable technology intended to power the so-called metaverse. Earlier this month, Meta laid off more than 1,000 Reality Labs employees who worked on VR-related initiatives, including internal studios, as part of a shifting of resources to AI and related wearable devices, like the Ray-Ban Meta smart glasses. Although Meta tech chief Andrew Bosworth told media outlets last week that Meta is not halting its VR efforts, the company's outsized impact on that industry has chilled some developers and sparked fears of a VR winter, CNBC reported. Analysts estimate Reality Labs to post a fourth-quarter operating loss of $5.67 billion on $940.8 million in sales. That unit has had over $70 billion in total operating losses since late 2020.

Meta's stock surges on strong earnings, revenue and bullish guidance

Meta's stock surges on strong earnings, revenue and bullish guidance Meta Platforms Inc. beat Wall Street's expectations today as it delivered its fourth-quarter financial results, following up with bullish guidance for first-quarter sales, sending its stock higher in extended trading. The social media giant reported earnings before certain costs such as stock compensation of $8.88 per share on revenue of $59.89 billion, up 24% from the same period one year earlier. Those numbers were impressive, easily beating the Street's targets of $8.23 per share in earnings and $58.59 billion in revenue. Net income for the period ended at $22.76 billion, up from $20.83 billion one year earlier. The company's advertising business accounted for the vast majority of its revenue in the quarter, generating sales of $58.1 billion, or 97% of the total. Meta added that it ended the quarter with 3.58 billion daily active people across its application ecosystem, which includes Facebook, Instagram, Messenger and WhatsApp. Meta Chief Financial Officer Susan Li said the company is aiming for revenue of between $53.5 billion and $56.5 billion in the current quarter, well ahead of the Street's $51.41 billion consensus estimate. The forecast is "underpinned by the strong demand that we saw through the end of quarter four and continuing into the start of 2026," she explained. In addition to its revenue guidance, Meta provided a forecast for its total expenses in fiscal 2026, saying it expects this to come to between $162 billion and $169 billion. Most of that money will go toward the capital expenditures for Meta's ongoing artificial intelligence push, which requires massive investment in data center resources. Li said capex is expected to fall between $115 billion and $135 billion this year, ahead of the analyst's forecast of $110.7 billion. The midpoint of Meta's guidance range is almost twice as much as the $72.2 billion it spent on capex in 2025. According to Li, the increased capex budget is necessary because of the "year-over-year growth driven by increased investment to support our Meta Superintelligence Labs efforts and core businesses." Meta founder and Chief Executive Mark Zuckerberg (pictured) allowed Li to discuss the finances, but he piped up when asked about the company's progress on the technology side. He told analysts that the company is expecting Superintelligence Labs to release its first AI models "in the coming months." "I expect our first models will be good, but more importantly, we'll show the rapid trajectory that we're on," Zuckerberg said. "And then I expect us to steadily push the frontier over the course of the year, as we continue to release new models." Investors have big expectations for Superintelligence Labs, which was established as part of a major restructuring of Meta's AI efforts. The company has thrown serious money at the endeavor, including the $14.3 billion it invested in the AI startup Scale AI Inc., as part of a deal to acquire the services of its founder Alexandr Wang, who now leads Superintelligence Labs. Wang has been tasked with overseeing the development of a new generation of more powerful AI models, following the tepid response to Meta's Llama 4 model. Most analysts believe that Llama is no match for the most advanced models of competitors such as OpenAI Group PBC, Google LLC and Anthropic PBC. That suggests Meta is falling behind, as earlier iterations of Llama were generally thought to be more or less as capable as those released by its rivals. Reports indicate that Meta has been testing a new frontier model code-named Avocado that's designated as the successor to Llama 4, and it's thought that the company wants to launch it in the first half of the year. AI is not the only money pit Meta has to contend with. The company reported that its Reality Labs unit, which is focused on metaverse technologies such as virtual reality headsets, recorded an operating loss of $6.02 billion in the quarter, while generating just $955 million in revenue. That's worse than expected, with the Street forecasting an operating loss of $5.67 billion. Since launching in late 2020, the Reality Labs unit has racked up almost $80 billion in total operating losses. Meta's failure to stem the bleeding apparently has prompted Zuckerberg to take action at last. Earlier this month, the unit laid off more than 1,000 employees who had been working on virtual reality projects, including some of its internal studios. The layoffs were characterized as a shifting of resources to AI and wearable devices such as the Ray-Ban Meta smart glasses. Though Meta is forecasting more of the same for Reality Labs in fiscal 2026, Zuckerberg told analysts on the call that he expects that its losses will peak this year, before gradually falling in future years. Meta's stock initially gained more than 10% on the back of today's report, before falling slightly to settle at a 7% gain. That means the stock is up just over a percentage point in the year to date, more or less in line with the broader S&P 500 index.

Meta posts stronger-than-expected Q4 results though costs continue to soar

Meta's fourth-quarter results jumped past Wall Street's expectations thanks to solid advertising revenue, sending shares sharply higher in after-hours trading Wednesday. The company earned $22.77 billion, or $8.88 per share, in the October-December quarter. That's up 9% from $20.84 billion, or $8.02 per share, in the same period a year earlier. Revenue grew 24% to $59.89 billion from $48.39 billion. Analysts, on average, were expecting earnings of $8.21 per share on revenue of $58.5 billion, according to a poll by FactSet. "Once again, Meta surpassed analysts' earnings expectations for the quarter, cementing its position as one of the world's most dominant media companies," said Debra Aho Williamson, chief analyst at Sonata Insights. "Its strong performance provides a solid foundation to continue its massive investments into AI. If there were any signs of revenue shortfall, investors would look at the capital expenditures more negatively." Meta's expenses, which the company already warned will be significantly higher this year, grew 40% to $35.15 billion. For the current quarter, Meta is forecasting revenue in the range of $53.5 billion to $56.5 billion. That's above analysts' forecast of $51.4 billion. For 2026, Meta is forecasting expenses in the range of $162 billion to $169 billion, driven by infrastructure costs and employee compensation, particularly for the artificial intelligence experts it's been hiring at eye-popping pay levels. Meta had 78,865 employees at the end of the year, an increase of 6% from a year earlier. Shares of the Menlo Park, California-based company rose $73.15, or 10.9%, to $741.88 in after-hours trading.

Meta Stock Climbs After Q4 Reveals Blue Skies, Massive AI Profits - Meta Platforms (NASDAQ:META)

Meta Platforms, Inc. (NASDAQ:META) shares climbed on Thursday as major Wall Street analysts weighed in on its standout fourth-quarter report. The overarching theme was a blue-sky scenario in which massive AI spending is rewarded with accelerated growth. META stock is climbing. See the chart and price action here. Meta Analysts BofA Securities: Meta's results are a proof point for the benefits of AI in its core ad business, according to BofA. Post highlighted that Meta can self-fund its massive investments while still maintaining positive free cash flow. Rosenblatt: Crockett got into the nitty-gritty of Meta's massive $100 billion spending hike (capex + opex). He estimates it is delivering a ~50% pretax return due to new "ultra-high contribution margin revenues." "The hockey stick in capex and opex growth has to come to an end... Meta in no way we believe is looking for negative FCF," the analyst said. The firm also noted that output per software engineer has increased by 30% since early 2025, driven by agentic coding. Wedbush: Devitt highlighted Meta's Q1 revenue guidance as fully debunking the narrative of a slowdown and said that significant upside still remains from the Meta AI assistant through business agents and automated advertiser tools. JPMorgan: Anmuth pointed to outsized Q1 revenue growth putting Meta back on track to justify its aggressive investment levels. To scale even quicker, Meta is significantly increasing 3rd-party cloud spend, partnering with hyperscalers and neoclouds. KeyBanc: In a report titled "AI Has Returns and the Sky Is Blue," KeyBanc described Meta's results as a best-case scenario where massive revenue growth more than offsets ballooning expenses. The firm noted that, excluding the pandemic, 2026 is projected to see the highest revenue growth rate for Meta since 2019. Goldman Sachs: Meta's business is finally starting to show the scaling effects of AI on content recommendation. This is creating a positive feedback loop for engagement. The public release of the next foundational model from the Meta Superintelligence Group is a major catalyst for 2026. Cantor Fitzgerald: Meta has one of the highest monetization rates for compute in the AI industry. Meta doubling its GPUs and adopting sequence-learning architectures has led to immediate gains in Facebook ad clicks (+3.5%) and Instagram conversions (>1%). Meta Market Reaction Investors seemed as pleased as Wall Street was with Meta's results, pushing the stock 9.8% higher on heavy volume to trade at $734.39 Thursday afternoon, according to Benzinga Pro. Image: Shutterstock Market News and Data brought to you by Benzinga APIs

7 Reasons Why Meta Platforms Is Arguably the Best AI Stock to Buy Right Now

What's the best artificial intelligence (AI) stock to buy in early 2026? Several top contenders come to mind immediately. After Meta Platforms' (META 2.95%) stellar fourth-quarter update last week, it's definitely on the short list -- and perhaps deserves the top spot. Here are seven reasons why Meta arguably is the best AI stock to buy right now. 1. AI is transforming Meta's core ad business Meta remains a digital advertising juggernaut. Its ad revenue soared 24% year over year in Q4 to $58.1 billion. And AI is transforming the company's core ad business, boosting revenue and profits. In Q4, Meta changed the architecture of the GEM model it uses for ad ranking and doubled the number of GPUs used to train the AI model. The results were impressive: a 3.5% increase in ad clicks on Facebook, with a 1%+ increase in ad conversions on Instagram. The company expects further performance gains going forward. 2. Agentic coding is turbocharging Meta's productivity The speed of software development is critical to Meta's growth story. Thanks to agentic coding -- the use of agentic AI to write, test, and debug software with minimal human intervention -- the company's output per engineer has jumped 30% since the beginning of 2025. Meta's productivity improvement is even more impressive with power users, with AI coding tools increasing their output by a staggering 80% year over year. There's even better news for Meta's shareholders. CFO Susan Li said in the Q4 earnings call, "We expect this growth to accelerate through the next half [of 2026]." 3. Smart glasses could be the biggest device since smartphones Sales of Meta's AI-powered smart glasses more than tripled in 2025. This growth could be only the tip of the iceberg. Meta CEO Mark Zuckerberg said in the Q4 update, "I think that we're at a moment similar to when smartphones arrived, and it was clearly only a matter of time until all those flip phones became smartphones." He noted that billions of people worldwide currently wear glasses and added, "It's hard to imagine a world in several years where most glasses that people wear aren't AI glasses." 4. Meta's personal superintelligence is poised to be a game changer Some people might have rolled their eyes when Zuckerberg announced Meta's commitment last year to developing AI superintelligence. However, the company's vision to build personal superintelligence is poised to be a game changer. Zuckerberg promised in the Q4 earnings call, "This is going to be a big year for delivering personal superintelligence." He said that Meta is already beginning to see the potential of AI that understands users' history, interests, content, and relationships. 5. Meta Compute should pay off handsomely AI infrastructure is a significant constraint for any company developing AI systems. That's why Meta established Meta Compute a few weeks ago. The goal of this new division will be to invest in creating custom silicon and energy sources needed for AI. Importantly, Meta is also architecting its systems to support any type of chip. Its Andromeda ad retrieval engine can now run on Nvidia (NVDA 0.72%) or AMD (AMD 6.09%) GPUs, as well as on Meta's internally developed MTIA accelerators. Meta Compute should pay off handsomely over time by reducing Meta's reliance on third-party chips and lowering energy costs. 6. Agentic AI for businesses is already a winner for Meta We've already mentioned how agentic AI in coding is helping Meta increase productivity. The technology is also enabling the company to make more B2B revenue. Meta's business AIs on its WhatsApp messaging platform now support over 1 million weekly conversations between customers and businesses in Mexico and the Philippines. The company plans to expand the availability of these AI agents to additional markets in 2026, while further beefing up their capabilities. 7. Reality Labs' losses should decline If it weren't for Reality Labs (Meta's segment focused on augmented and virtual reality) posting a $6 billion loss in Q3, Meta's profits would have been 24% higher. Investors who have grumbled about the ongoing hemorrhaging of money with Reality Labs received good news in Meta's Q4 update. While the segment's losses in 2026 will probably be similar to those in 2025, Meta expects the bottom line to improve going forward. Is this merely an idle promise? I don't think so. Meta is now focusing most of its Reality Labs investments on AI glasses and wearables. I expect these investments to deliver tremendous returns over time.

Analysts optimistic of Meta's hefty AI spending ambitions after stellar Q4 report (META:NASDAQ)

Meta Platforms Inc. (META) delivered a knockout fourth quarter report with revenue, profit, and a current quarter forecast that crushed the average analyst estimate, helping investors overlook the Mark Zuckerberg-led company's heavy spending budget as it transforms into an artificial intelligence behemoth. Analysts report that AI investments are already driving revenue upside, improved ad monetization, engagement, and are expected to support faster top-line growth and margin expansion despite heavy spend. Concerns cited include margin compression due to soaring CAPEX and Reality Labs losses, medium-term margin pressure, and cash flow volatility, though strong ongoing profitability and cash generation counterbalance these risks. Analysts generally see Meta shares as undervalued or fairly valued compared to peers, highlighting attractive P/E multiples and strong profitability, but some caution about valuation given CAPEX growth and recommend holding at current levels.

Meta Platforms Stock Investors Just Got Fantastic News from CEO Mark Zuckerberg

While many companies are looking for ways to profit from artificial intelligence (AI), Meta Platforms (META 0.43%) has flipped the narrative on its head. The company has long used sophisticated algorithms to surface relevant content and direct targeted advertising to users of its social media platforms. The advent of generative AI has taken that approach to the next level. When Meta reported its quarterly results after the market close on Wednesday, one thing was crystal clear. The company continues to stick to the strategy that fueled its success while also looking for ways to profit from an AI-centric future. The numbers tell the tale For the fourth quarter, Meta generated revenue that grew 24% year over year to $59.9 billion. This fueled diluted earnings per share (EPS) of $8.88, which increased 11%. For context, analysts' consensus estimates were calling for revenue of $58.47 billion and EPS of $8.22, so Meta sailed past Wall Street's expectations. The results were fueled by Meta's social media audience, with daily active users of 3.58 billion, up 7% year over year. This ever-growing user base is Meta's target market for digital advertising, which generates the lion's share of its revenue. CEO Mark Zuckerberg revealed that Meta has been reaping the benefits of its foray into AI. In the fourth quarter, ad impressions climbed 18% year over year, driving the average price per ad up 6%. Zuckerberg said the company plans to lean into its AI-driven success. In 2026, Meta is planning to spend between $115 billion and $135 billion on capital expenditures (capex), primarily on AI infrastructure. Meta's ability to scale down its Llama large language models (LLMs) to smaller AI systems for targeted advertising has been tremendously successful, boosting user engagement and making its adtech business even more profitable. This is a prime example of getting a great return on investment (ROI), the holy grail of AI spending. Another development that was music to the ears of shareholders was comments from CFO Susan Li. Meta has been pouring money into Reality Labs, which serves as the hub for the company's metaverse, smart glasses, and other augmented reality and virtual reality products. Li noted that full-year losses for Reality Labs in 2026 will be "similar to 2025 levels." After funneling more than $19 billion into the segment last year, investors were pleased to hear that things wouldn't be getting any worse. Perhaps as importantly, Meta is predicting that its growth streak will continue. For the first quarter, management's forecast is calling for revenue of $55 billion at the midpoint of its guidance. That would represent year-over-year growth of 30%. That was well ahead of Wall Street's expectations of $51.4 billion. Meta continues to be one of the clearest examples of using AI to boost results in near real time. At the same time, the company is investing in building out its infrastructure, which will support its growth over the coming decade. Finally, with a price-to-earnings (P/E) ratio of less than 30, Meta offers a common-sense, low-risk way to profit from the AI revolution.

Meta stock rating reiterated at Outperform by William Blair By Investing.com

Investing.com - William Blair has reiterated an Outperform rating on Meta Platforms Inc. (NASDAQ:META), highlighting the company's growing engagement metrics and AI strategy. The tech giant, currently valued at $1.69 trillion, has maintained its position as a prominent player in the Interactive Media & Services industry with revenue reaching $189.5 billion in the last twelve months. Meta reported over 3.5 billion daily active users across its Family of Apps in December, with Facebook and WhatsApp each exceeding two billion daily active users and Instagram approaching that milestone. Ad impressions grew 18% in the fourth quarter of 2025 and 12% for the full year, while Instagram Reels watch time increased over 30% in the fourth quarter. The social media giant plans to roll out a new AI model in the coming months, with CEO Mark Zuckerberg indicating it demonstrates the rapid trajectory of the company's Superintelligence Labs. Meta expects to release additional AI models and products throughout 2026. Meta's capital expenditures reached $72 billion in 2025, with guidance for 2026 set at $125 billion at the midpoint, primarily driven by increased investments in Superintelligence Labs and core business infrastructure. Operating expenses are projected to reach $165.5 billion at the midpoint for 2026. Despite these substantial investments, Meta maintains an impressive 82% gross profit margin and operates with a moderate debt level of $51 billion, demonstrating strong financial discipline. Despite the significant increase in spending, Meta still expects its full-year operating income to exceed 2025 levels, with the majority of expense growth attributed to infrastructure costs, higher depreciation, and infrastructure operating expenses. The company generated $98.4 billion in EBITDA and $44.8 billion in levered free cash flow over the last twelve months, providing ample financial flexibility to fund its ambitious growth initiatives while delivering a diluted EPS of $22.63. In other recent news, Meta Platforms has reported a strong performance in its fourth quarter of 2025, with revenue and operating income exceeding consensus expectations by 2.5% and 2.9%, respectively. This robust performance has led several firms to adjust their price targets for the company. BMO Capital raised its price target for Meta Platforms from $710 to $730, maintaining a Market Perform rating. BofA Securities also increased its price target from $810 to $885, highlighting the impact of artificial intelligence on Meta's returns. RBC Capital reiterated an Outperform rating, noting that Meta's Q4 revenue beat and significant Q1 guidance raise addressed investor concerns about future expenditures. Goldman Sachs raised its price target from $815 to $835, citing accelerating momentum in Meta's core advertising business and AI investments. KeyBanc Capital Markets adjusted its target from $835 to $855, driven by a positive revenue growth outlook and AI's demonstrated value delivery. These developments underscore the positive sentiment among analysts regarding Meta's recent performance and future prospects. This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Meta Platforms: Reassures Markets With Strong Results and Growth Outlook for 2026

Meta shares rise over 9% in after-hours trading on Wednesday, driven by better-than-expected quarterly results and an upbeat outlook for the start of the year. The group posted EPS of $8.88 in Q4 2025, versus $8.23 expected, on revenue of $59.89bn, up 24% y-o-y. For Q1 2026, Meta forecasts revenue of between $53.5bn and $56.5bn, well above the consensus of $51.41bn. Daily active users reached 3.58 billion, in line with expectations. Despite these performances, Meta is anticipating a sharp increase in spending in 2026, between $162bn and $169bn, including up to $135bn in capital expenditures, mainly for artificial intelligence. These figures are well above market expectations and reflect the group's ambitions in advanced AI, via its Meta Superintelligence Labs and the TBD structure, strengthened by talent from Scale AI. The group is currently testing a new AI model, "Avocado," the successor to Llama, with a release expected in H1. At the same time, Reality Labs, the virtual reality (VR) division behind Meta Quest headsets, continues to weigh on Meta's results with a loss of $6.02bn in Q4 on $955m in revenue, figures above analysts' estimates. Over 1,000 job cuts were announced in early January in that division, marking a refocus toward AI and connected devices such as Ray-Ban Meta glasses. While growth in the virtual reality market remains slow, Meta says it is not abandoning the segment. The group also warns of looming legal and regulatory risks, notably in the US and the EU, which could lead to significant financial losses.