Meta rises after sales, earnings beat and Q1 revenue guidance exceeds expectations
Even with spending much higher than expected, Meta still expects operating income to increase year on year in 2026.
Meta released its fourth-quarter results after the close on Wednesday, with sales coming in at a record high of $59.9 billion, well above the $58.4 billion Wall Street had expected, and earnings per share of $8.88 also far north of the $8.19 consensus estimate.
The stock jumped more than 6% in after-hours trading.
For the current quarter, the Mark Zuckerberg-led social media giant expects sales of $53.5 billion to $56.5 billion, well ahead of the consensus call for $51.3 billion.
However, those higher sales are coming with even more aggressive spending: Meta’s capex outlook for 2026 is $115 billion to $135 billion, exceeding the $110.6 billion estimate from analysts. Full-year estimated expenses of $162 billion to $169 billion are also much more than the consensus call for $151 billion.
“Despite the meaningful step up in infrastructure investment, in 2026 we expect to deliver operating income that is above 2025 operating income,” according to the press release.
Generally Meta’s capex growth has been growing faster than its revenue, something that’s been raising investor scrutiny more so than it has for the tech giant’s peers, which have cloud business revenue to more directly offset their spending on AI. On a related note, Meta’s expected profit margins have deteriorated since the end of 2024, unlike any of its megacap hyperscaler counterparts.
Ahead of earnings, Deutsche Bank wrote that while it thinks Meta is “positioned favorably” in the AI race, “investor fears around the potential impact to earnings from the projected spend, as well as reduced financial flexibility from the elevated investments in the near-to-mid-term, could somewhat outweigh optimism around faster growth.”
Looking forward, investors will be focused on the progress of Meta’s AI models and how its extensive spending on artificial intelligence will compare with the additional revenue earned from those investments.
