Meta delivered a stronger-than-expected fourth-quarter performance on Wednesday, beating Wall Street estimates on both earnings and revenue and issuing an upbeat sales outlook that sent its shares jumping as much as 10% in after-hours trading.
The results capped a year in which the social media giant tightened its grip on the global digital advertising market while accelerating an aggressive and costly push into artificial intelligence, a strategy CEO Mark Zuckerberg has framed as existential to the company’s long-term relevance.
For the fourth quarter, Meta posted earnings per share of $8.88, well above the $8.23 forecast by analysts surveyed by LSEG. Revenue came in at $59.89 billion, topping expectations of $58.59 billion and marking a 24% increase from a year earlier.
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The company’s guidance for the current quarter further buoyed sentiment. Meta said it expects first-quarter revenue to range between $53.5 billion and $56.5 billion, comfortably ahead of the $51.41 billion analysts had penciled in. Finance chief Susan Li said the outlook was driven by “strong demand that we saw through the end of Q4 and continuing into the start of 2026,” signaling that advertisers remain willing to spend heavily across Meta’s platforms.
Advertising once again did the heavy lifting. The company said ad revenue reached $58.1 billion in the quarter, accounting for nearly 97% of total sales. Meta’s scale remains unrivalled in the sector, with daily active people across its family of apps — including Facebook, Instagram, and WhatsApp — hitting 3.58 billion, in line with Wall Street estimates and underscoring the breadth of its global reach.
Behind the headline numbers, however, investors were also focused on Meta’s spending trajectory, particularly as it pours capital into AI infrastructure at a pace few rivals can match. The company said it expects total expenses in 2026 to land between $162 billion and $169 billion, a figure that reflects both rising operating costs and heavy capital investment.
Capital expenditures tied to AI are forecast to reach between $115 billion and $135 billion in 2026, well above analyst expectations of $110.7 billion and almost double the $72.2 billion Meta spent on capex in 2025. The company said the surge is driven by “increased investment to support our Meta Superintelligence Labs efforts and core business,” a reference to its ambition to build and train frontier AI models at scale.
Zuckerberg told analysts that Meta will begin releasing its latest generation of AI models in the coming months. While he cautioned that the first releases may not immediately redefine the market, he emphasized the pace of progress. He said he expects Meta to demonstrate a “rapid trajectory” and to “steadily push the frontier over the course of the year” as new models are rolled out.
That push follows a sweeping overhaul of Meta’s AI organization in 2025. The company invested $14.3 billion in Scale AI as part of a broader effort to recruit its founder, Alexandr Wang, and key members of his team. Wang now oversees Meta’s top-tier unit, internally known as TBD, which is tasked with developing the company’s most advanced AI systems.
The restructuring came after Meta’s Llama 4 model received a muted response from developers last spring, raising questions about the company’s ability to keep pace with rivals. Meta has since been testing a new frontier model and Llama successor, code-named Avocado, which it plans to release in the first half of the year, according to CNBC.
While Meta’s core advertising engine is firing on all cylinders, its metaverse ambitions continue to weigh heavily on the bottom line. The Reality Labs division posted an operating loss of $6.02 billion in the quarter on revenue of $955 million, worse than the $5.67 billion loss analysts had expected. Since late 2020, Reality Labs has accumulated nearly $80 billion in operating losses.
Earlier this month, Meta laid off more than 1,000 employees in Reality Labs, including staff working on virtual reality studios, as it reallocated resources toward AI and wearable devices such as its Ray-Ban Meta smart glasses. Although Meta’s chief technology officer, Andrew Bosworth, has insisted the company is not abandoning VR, the pullback has unsettled parts of the developer community and fueled concerns about a prolonged slowdown in the sector.
Meta said it expects Reality Labs’ operating losses in 2026 to remain broadly in line with the previous year. Zuckerberg suggested the worst may be nearing an end, telling analysts that he expects this year to mark the peak of the unit’s losses, followed by a gradual improvement.
The company also flagged mounting regulatory and legal risks. Meta warned that ongoing scrutiny in the European Union and the United States could “significantly impact our business and financial results,” noting that several high-profile social media trials set to begin this year could result in material losses.
However, investors appear focused on the company’s near-term momentum for now. Strong ad demand, resilient user engagement, and an ambitious — if expensive — AI roadmap have helped Meta reassert itself as one of the technology sector’s dominant profit engines, even as it navigates regulatory pressure and a costly bet on the future of computing.