Meta shares jumped as much as 10% in after-hours trading on Wednesday after the company reported fourth-quarter earnings that exceeded Wall Street estimates and issued a stronger-than-expected sales forecast.
Here’s how Meta performed versus analyst expectations compiled by LSEG:
- Earnings per share: $8.88 vs. $8.23 expected
- Revenue: $59.89 billion vs. $58.59 billion expected
Looking ahead, Meta projected first-quarter revenue between $53.5 billion and $56.5 billion, well above analysts’ consensus estimate of $51.41 billion.
Chief Financial Officer Susan Li said the guidance reflects “strong demand that continued through the end of Q4 and into the beginning of 2026.”
Fourth-quarter revenue increased 24% year over year, driven largely by advertising, which generated $58.1 billion and accounted for nearly 97% of total revenue. Daily active users reached 3.58 billion, matching Wall Street expectations.
Meta also shared its spending outlook, forecasting total expenses of $162 billion to $169 billion in 2026. Capital expenditures tied to artificial intelligence are expected to reach $115 billion to $135 billion, exceeding analyst estimates of $110.7 billion and nearly doubling the company’s 2025 capex of $72.2 billion.
The company said the increased investment reflects ongoing efforts to expand Meta Superintelligence Labs and support its core businesses. CEO Mark Zuckerberg told analysts that new AI models will roll out “over the coming months,” emphasizing rapid progress and continued innovation throughout the year.
In 2025, Meta restructured its AI division and invested $14.3 billion in Scale AI, bringing founder Alexandr Wang and his team onboard. Wang now leads Meta’s advanced AI development unit, formed after the lukewarm reception to the Llama 4 model. Meta is reportedly testing a next-generation AI model, code-named Avocado, expected to launch in the first half of the year.
Meanwhile, Meta’s Reality Labs division posted an operating loss of $6.02 billion on $955 million in revenue, slightly worse than analyst projections. Since late 2020, Reality Labs has accumulated nearly $80 billion in operating losses.
Earlier this month, Meta laid off over 1,000 Reality Labs employees as it shifted resources toward AI and wearable technologies like Ray-Ban Meta smart glasses. While the company says it remains committed to virtual reality, industry concerns persist about slowing momentum in the VR space.
Meta expects Reality Labs losses in 2026 to remain similar to the prior year, though Zuckerberg said 2025 should mark the peak, with gradual improvements ahead.
Finally, the company warned that increasing regulatory and legal challenges in the U.S. and European Union could significantly affect its business, noting that several major social media-related trials beginning this year may result in material financial losses.