Meta’s AI Ambitions Fuel Record Spending Plans

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Meta Platforms delivered a robust quarterly performance, yet simultaneously issued a bold declaration: its massive advertising engine will not only sustain growth but also bankroll an unprecedented surge in artificial intelligence investment. This dual mandate creates the central tension for shareholders. While heavy spending could cement a long-term competitive edge, it immediately pressures the company's cost structure. The critical question is whether the pace of AI infrastructure expansion aligns with near-term profitability goals.

The company's fourth-quarter 2025 results surpassed Wall Street expectations, powered overwhelmingly by its core business. Advertising accounted for approximately 97% of total revenue, demonstrating the enduring power of this cash-generating operation and underwriting Meta's capacity to fund its next strategic chapter.

Management's forward guidance struck an unexpectedly optimistic tone. For the first quarter of 2026, revenue is projected between $53.5 billion and $56.5 billion, well above analyst consensus. Chief Financial Officer Susan Li attributed the strong forecast to resilient demand that carried through the end of Q4 and into the new year.

This growth is not merely a function of user expansion but also of improved monetization. Meta reported 3.58 billion daily active people across its Family of Apps for December 2025, a 7% year-over-year increase. Furthermore, Ad Impressions grew by 18%, while the average price per ad rose 6%.

Capex Soars to $115-$135 Billion as AI Bet Intensifies

The most startling revelation lies in the capital expenditure outlook. For 2026, Meta anticipates investments in the range of $115 billion to $135 billion—nearly double the 2025 level. These funds are earmarked primarily for infrastructure to support AI ambitions, including the "Meta Superintelligence Labs" and core product enhancements.

The company also expects computational capacity to become a periodic constraint in 2026, indicating that demand for compute is outpacing near-term supply. Despite this massive expenditure ramp, management forecasts a higher operating profit for 2026 compared to 2025, signaling strong confidence in advertising's continued earning power.

Key Financial Figures:
- Q4 Revenue: $59.89 billion (a 24% year-over-year increase)
- Q4 Earnings Per Share: $8.88 (exceeding expectations)
- 2026 Capex Guidance: $115–135 billion
- 2026 Total Expense Guidance: $162–169 billion

Reality Labs Continues as a Costly Venture

In stark contrast to the profitable apps segment, Reality Labs remains deeply unprofitable. The division posted an operating loss of $6.02 billion on revenue of $955 million for the fourth quarter. For the full year 2025, the total operating loss reached $19.2 billion.

Meta expects similarly scaled losses for Reality Labs in 2026, anticipating they will peak this year before gradually declining. Aligning with this outlook, the company laid off approximately 1,500 employees within the division in January, shifting resources toward AI initiatives and wearables like the Ray-Ban Meta Smart Glasses.

As trading began for the week, Meta shares stood at $706.00, slightly below Friday's close of $718.10. Investors will next scrutinize the company's progress when it reports quarterly results on April 29, 2026. That update will reveal whether the strong advertising trend persists and how swiftly the escalated AI investments translate into measurable advancements.