Meta Stock Surges on Strong Earnings, Revenue, and Optimistic Guidance

Meta Platforms Inc. surpassed Wall Street's expectations with its fourth-quarter financial results released today, offering an optimistic sales forecast for the first quarter that propelled its stock upward in after-hours trading.

The social media giant reported adjusted earnings per share of $8.88 and revenue of $59.89 billion, marking a 24% increase compared to the same period last year. These impressive figures easily exceeded analyst targets of $8.23 per share and $58.59 billion in revenue. Net income for the quarter reached $22.76 billion, up from $20.83 billion a year ago.

The company's advertising business, constituting the vast majority of its quarterly revenue, generated $58.1 billion in sales, accounting for 97% of total revenue. Meta also reported 3.58 billion daily active users across its app family—including Facebook, Instagram, Messenger, and WhatsApp—by the end of the quarter.

Meta's CFO, Susan Li, projected first-quarter revenue between $53.5 billion and $56.5 billion, significantly higher than Wall Street's consensus estimate of $51.41 billion. She attributed this forecast to "the robust demand we observed at the end of the fourth quarter, which has continued into early 2026."

In addition to revenue guidance, Meta provided its total expense outlook for fiscal 2026, anticipated to range from $162 billion to $169 billion. A substantial portion of this will fund Meta's ongoing, AI-driven capital expenditures, requiring massive investments in data center infrastructure. Li stated that capital expenditures for the year are projected to be between $115 billion and $135 billion, exceeding analyst predictions of $110.7 billion. The midpoint of Meta's guidance range is nearly double its 2025 capital expenditure of $72.2 billion.

According to Li, the increased capital expenditure budget is necessary as "year-over-year growth is driven by heightened investments to support our Meta Superintelligence Labs initiatives and core business operations."

While Li handled the financial discussion, Meta founder and CEO Mark Zuckerberg (pictured) interjected when questioned about the company's technological progress. He informed analysts that the company anticipates its Superintelligence Labs will release its first AI model "within the coming months."

"I expect our first model to be strong, but more importantly, it will demonstrate the rapid development trajectory we are on," Zuckerberg said. "I then anticipate we will steadily advance the frontier throughout the year as we continue to release new models."

Investors have high expectations for Superintelligence Labs, a key component of Meta's major AI restructuring. The company has invested heavily in this initiative, including a $14.3 billion deal with AI startup Scale AI Inc. to secure the services of its founder, Alexandr Wang, who now leads the Superintelligence Labs.

Wang's mandate is to oversee the development of a new generation of more powerful AI models, following a tepid reception to Meta's Llama 4 model. Most analysts believe Llama fails to match the state-of-the-art models from rivals like OpenAI Group PBC, Google LLC, and Anthropic PBC. This perception suggests Meta is falling behind, as earlier versions of Llama were generally considered comparable to models released by its competitors.

Reports indicate Meta has been testing a new frontier model, codenamed Avocado, designated as the successor to Llama 4, with the company reportedly aiming for a launch in the first half of this year.

AI is not Meta's only significant capital drain. The company reported that its Reality Labs division, focused on metaverse technologies like virtual reality headsets, recorded an operating loss of $6.02 billion this quarter on revenue of just $955 million. This performance was worse than expected, with Wall Street forecasting a $5.67 billion operating loss. Since its launch in late 2020, the Reality Labs division has accumulated nearly $80 billion in operating losses.

Meta's inability to stem these losses appears to have finally prompted action from Zuckerberg. Earlier this month, the division laid off over 1,000 employees who were working on virtual reality projects, including some internal studios. The layoffs were described as a reallocation of resources toward AI and wearable devices, such as the Ray-Ban Meta smart glasses.

Although Meta anticipates a similar performance from Reality Labs in fiscal 2026, Zuckerberg told analysts on the call that he expects its losses to peak this year before gradually declining in the coming years.

Meta's stock initially surged over 10% following today's report before paring some gains, ultimately closing up 7%. This brings its year-to-date increase to just over one percentage point, roughly in line with the broader S&P 500 index.