Social media giant Meta reported fourth-quarter earnings , exceeding market expectations in both revenue and profit. Supported by continued growth in its advertising business, Meta successfully offset market concerns about its significantly increased capital expenditures. Following the earnings release, Meta's stock price surged nearly 10% in after-hours trading, reflecting investors' renewed assessment of its long-term AI strategy.
Meta's revenue and EPS both exceeded market expectations, with advertising remaining the biggest driver of growth.
According to its financial report, Meta's revenue reached $59.89 billion this quarter, a 24% year-on-year increase, exceeding the market's expectation of $58.59 billion; earnings per share (EPS) were $8.88, also better than analysts' estimates of $8.23, indicating that its profitability remains at a high level.
Advertising remained the primary revenue driver, generating $58.1 billion in revenue in the quarter, accounting for nearly 97% of total revenue. In terms of user base, Meta's various applications boasted 3.58 billion daily active users, in line with analysts' expectations, demonstrating that its core products still have a stable user base.
Strong earnings forecasts proved key, sending Meta shares surging nearly 10% in after-hours trading.
In addition to its impressive financial figures, Meta's revenue outlook has also become a focus of market attention. CFO Susan Li estimates that revenue for the first quarter of 2026 will be between $53.5 billion and $56.5 billion, higher than analysts' original expectations of approximately $51.4 billion.
Fueled by this, Meta's stock price rose by about 10% in after-hours trading following the earnings release, but has since retreated slightly. The market generally believes that the earnings forecast indicates strong momentum in advertising revenue that is likely to continue into early 2026, providing support for the stock's short-term performance.
Capital expenditures surged to $169 billion for the year, with AI becoming the main investment focus.
While delivering impressive results, Meta also acknowledged that future spending will increase significantly. The company forecasts total spending for 2026 to be between $162 billion and $169 billion, with capital expenditures expected to reach $115 billion to $135 billion, almost double that of 2025 and higher than analysts' original forecast of $110.7 billion.
Meta indicated that the increased spending was primarily for AI infrastructure, computing power investment, and related research programs at Meta Superintelligence Labs, while also revealing that it will release its latest AI model in the coming months.
Reality Labs lost $6 billion, and Zuckerberg offered a conciliatory remark, saying it "has reached its peak."
Compared to the solid performance of its advertising business, Meta's virtual reality team, Reality Labs, remains the main source of losses. The division reported an operating loss of $6.02 billion this quarter, bringing its cumulative losses since 2020 to nearly $80 billion.
However, CEO Mark Zuckerberg stated that Reality Labs' losses in 2026 are expected to be similar to those in 2025: "2025 was the peak year for the division's losses, and we will gradually improve this situation while focusing our resources more on areas such as AI and smart wearable devices."
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The market has temporarily set aside concerns about the high costs of AI, but its monetization potential remains uncertain.
In summary, Meta's quarterly earnings report successfully shifted market focus from whether its high capital expenditures in the AI field would generate actual returns to whether they would impact company revenue. With continued growth in advertising revenue and various data significantly exceeding expectations, investors chose to temporarily ignore the expenditure pressure and instead focus on Meta's potential in the future growth trajectory of its large-scale investment in AI.
This article, titled "Meta's Strong Q4 Earnings Report Drives Stock Price Up 7%, Advertising Revenue Helps Revenue Approach $60 Billion," first appeared on ABMedia ABMedia .
