Meta Platforms Inc. reported better-than-expected fourth-quarter revenue of $59.9 billion, beating the average estimate of $58.4 billion, easing investor concerns about record AI spending plans. | Photo credit: Dado Ruvic/Reuters
The social networking giant beat expectations for holiday quarter revenue and gave a strong forecast for the current period during its earnings report on Wednesday. Improvements in its online advertising business will enable Meta to spend hundreds of billions of dollars on AI infrastructure in the coming years. Meta’s shares rose more than 11% in extended trading.
Record investments 2026
Meta predicted record spending for 2026, driven by Chief Executive Officer Mark Zuckerberg’s aggressive campaign to amass the infrastructure, computing power and talent he deems necessary to win a competitive AI race. Zuckerberg has said his strategy focuses on “front-loading” computing capacity in preparation to achieve the company’s goal of superintelligence, a theoretical milestone at which AI can meet or outperform humans on many tasks.
To get there, Meta is spending money aggressively. The company estimates that full-year capital expenditures will be between $115 billion and $135 billion, above the average analyst estimate of $110.6 billion, according to data compiled by Bloomberg. If Meta reaches the top of that range, it will represent a jump of about 87% from 2025, a record year when cap-ex was $72 billion.
AI acceleration
During a call with investors, Zuckerberg said he is looking forward to “a big AI acceleration” that has been happening in the tech industry for more than a year. Following an overhaul of Meta’s AI program in 2025, Zuckerberg said Meta will release new models and products soon, although the Facebook founder’s short-term expectations were unusually muted: “I expect our initial models to be good, but more importantly, we will show the rapid trajectory we are on,” he said. He reiterated on the call that Meta’s upcoming models may not wow at launch, but will improve significantly over time.
Ad support
To finance these expensive projects, Meta relies heavily on its advertising activities. The owner of Facebook, Instagram and WhatsApp said first-quarter revenue will be $53.5 billion to $56.5 billion, better than the average analyst estimate of $51.3 billion. Chief Financial Officer Susan Li spent much of her time on the call discussing ways Meta’s AI investments are helping the company better target ads and give users more personalized content recommendations that keep them scrolling.
Investors have traditionally been concerned about whether Meta’s companies will meaningfully benefit from the hefty AI investments. “Meta’s lack of modeling capabilities versus cross-border large language models creates uncertainty about monetization of its AI investments compared to large-scale cloud peers,” Bloomberg Intelligence analyst Mandeep Singh said in a note last week.
Turnover in the fourth quarter is correct
But those concerns were tamed on Wednesday. The social media giant reported fourth-quarter revenue of $59.9 billion, better than the $58.4 billion Wall Street expected on average. It was a sign that while spending has increased, the core business supporting these investments is also growing faster than expected.
Investors were less forgiving of Microsoft Corp., which saw shares tumble after unveiling a similarly ambitious spending outlook for 2026 on Wednesday.
AI investment strategy
Meta’s AI investment strategy has not always been well received. When Li warned investors in October that capital spending in 2026 was expected to be “significantly higher” than in 2025, some investors panicked and shares fell as much as 14%. Concerns remain that Meta’s spending may not lead to a meaningful new business line. During the call Wednesday, Zuckerberg was asked several times to talk about his vision for an AI company, but he kept his answers vague and promised to share more as the year progresses.
That hot and cold reaction from Wall Street hasn’t slowed Zuckerberg down. Meta’s CEO has publicly committed, including at a high-profile dinner at the White House, to spend $600 billion in the US by 2028 to support AI technology, infrastructure and workforce expansion. Li added during Wednesday’s earnings call that Meta will continue to seek external financing for some of its infrastructure projects.
These investments are in service of long-term goals, Zuckerberg said. “I think we have the most talented research efforts in the industry and some of the early indicators look positive,” he told investors. “But look, I think this is a long-term effort.”
Reality Labs losses
Despite Meta’s strong quarterly results on Wednesday, Matt Britzman, an analyst at Hargreaves Lansdown, said the “real headline is the relentless rise” in capital expenditure. “It wouldn’t be surprising if the stock reaction remained cool as investors absorb these aggressive investment plans,” he said.
While Meta’s advertising business will help the company weather some AI uncertainties, a separate unit continued its significant losses. Reality Labs, Meta’s unit focused on virtual reality and AI-enabled hardware, posted fourth-quarter revenue of $955 million and an operating loss of more than $6 billion for the fourth quarter. That brought total losses in 2025 to more than $19 billion.
Outlook
Zuckerberg told investors that these losses won’t last forever. “I expect Reality Labs’ losses this year to be similar to last year, and this will likely be the peak as we gradually reduce our losses going forward,” he said.
Earlier this month, Meta laid off about 10% of the staff at Reality Labs as part of a move to shift resources from some of its virtual reality products to more AI-focused ventures, including AI wearables such as the Ray-Ban Meta glasses.
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Published on January 29, 2026
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