Meta’s stock edged higher in after-hours trading on Wednesday after the company delivered a strong fourth-quarter earnings report that exceeded analysts’ expectations on both revenue and profit.
The results showcased Meta’s continued dominance in the social media and digital advertising space, while also shedding light on its deep investments in artificial intelligence (AI) and the metaverse—two areas that remain key to its long-term strategy.
Meta’s earnings per share (EPS) for the quarter stood at $8.02, surpassing the expected $6.77, while revenue reached $48.39 billion, ahead of the estimated $47.04 billion. This marked a 21% year-over-year increase in sales, reflecting the resilience of Meta’s advertising business despite broader economic challenges. Meanwhile, net income surged by 49% to $20.8 billion, up from $14 billion a year earlier, indicating improved profitability.
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The company projected first-quarter revenue to range between $39.5 billion and $41.8 billion, slightly below Wall Street’s expectations of $41.73 billion at the midpoint.
Despite this cautious guidance, Meta’s stock remained strong, reflecting investor confidence in the company’s expanding AI and advertising businesses.
Zuckerberg Signals Stronger Relationship with U.S. Government
Meta CEO Mark Zuckerberg took a notably optimistic tone on the company’s evolving relationship with the U.S. government, particularly under the current administration.
“We now have a U.S. administration that is proud of our leading companies, prioritizes American technology winning, and that will defend our values and interests abroad,” Zuckerberg told investors on a call. “I am optimistic about the progress and innovation that this can unlock.”
His remarks suggest that Meta expects fewer regulatory hurdles and stronger government backing for its expansion into AI and emerging technologies.
Meta AI Grows
Meta continues to ramp up its artificial intelligence initiatives, with its Meta AI chatbot surpassing 700 million monthly active users—an increase from 600 million in December.
Zuckerberg projected that Meta AI could reach one billion users in 2024, emphasizing the competitive advantage that comes with scale: “Once a service reaches that kind of scale, it usually develops a durable, long-term advantage,” he noted.
Meta’s push for open-source AI models was also a key theme. Zuckerberg cited the emergence of DeepSeek, a Chinese-built open-source large language model, as evidence that Meta’s Llama-branded AI models could gain widespread adoption.
“There’s going to be an open-source standard globally,” he said. “For our own national advantage, it’s important that it’s an American standard.”
Meta is moving quickly on AI development, having finished training a mini version of Llama 4, with the larger version progressing well.
Reality Labs Lost Billions, but Long-Term Vision Remains
Meta’s commitment to virtual reality (VR) and augmented reality (AR) continues to be a costly bet. The Reality Labs unit recorded a fourth-quarter operating loss of $4.97 billion, slightly better than analyst expectations of $5.4 billion in losses. The division generated $1.1 billion in revenue, primarily from its Quest VR headsets and Ray-Ban Meta Smart Glasses.
Since its inception, Reality Labs has accumulated over $60 billion in losses, raising persistent concerns on Wall Street about whether Meta’s heavy metaverse spending will ever pay off.
However, Meta continues to double down on its investment in the space. The company recently unveiled its Orion prototype AR headset, which can overlay digital objects onto a real-world field of view. It also released the $299 Quest 3S VR headset, designed for entertainment and fitness applications.
Meta’s $60-65 billion capital expenditure plan for 2025 underscores its ongoing commitment to expanding computing infrastructure, primarily for AI-driven initiatives. Zuckerberg reiterated that AI remains core to Meta’s broader ambitions, including its metaverse strategy.
However, Meta faces intensifying competition in the VR/AR space.
Apple launched its Vision Pro headset in February 2024, priced at $3,499, targeting a high-end consumer and enterprise market. Google and Samsung are working on a VR/AR device called “Project Moohan,” set for release in 2025.
Meta, however, is positioning itself as the affordable alternative to Apple’s premium offering, while betting on its AI ecosystem to drive mass adoption.
The behemoth’s fourth-quarter results reinforced its leadership in digital advertising while highlighting its aggressive push into AI and immersive technologies.
While the Reality Labs losses remain a concern, the company’s profitability and continued growth in AI services signal strong long-term prospects.
With a more favorable regulatory environment, expanding AI capabilities, and a growing metaverse ecosystem, Meta appears well-positioned to navigate 2025.