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Meta reported fourth-quarter revenue of $59.89 billion, representing a 24% year-over-year increase and beating analyst estimates. The company posted diluted earnings per share of $8.88, surpassing expectations of $8.02 from the previous year. The strong financial performance was driven primarily by Meta's advertising business, which generated $58.1 billion in revenue during the quarter, accounting for 97% of total revenue.
Strong Revenue Guidance Fuels Investor Optimism
Meta's first-quarter 2026 revenue guidance of $53.5 billion to $56.5 billion significantly exceeded Wall Street's consensus estimate of $51.41 billion. Chief Financial Officer Susan Li attributed the robust forecast to "strong demand that we saw through the end of Q4 and continuing into the start of 2026."
The company's advertising business showed solid momentum with ad impressions increasing 18% year-over-year for the fourth quarter, while average price per ad rose 6% during the same period. Daily active people across Meta's Family of Apps reached 3.58 billion in December 2025, matching analyst expectations and representing 7% year-over-year growth.
Massive AI Infrastructure Investment Plan
Meta outlined aggressive capital expenditure plans for 2026, projecting spending between $115 billion and $135 billion, nearly double the $72.2 billion invested in 2025. The substantial increase reflects Meta's commitment to advancing its artificial intelligence capabilities through its Meta Superintelligence Labs initiative.
CEO Mark Zuckerberg emphasized the company's AI ambitions during the earnings call, stating he expects Meta to "steadily push the frontier over the course of the year, as we continue to release new models." The company plans to release its latest AI models "over the coming months," following significant restructuring of its AI division in 2025.
Operating Expenses Rise Amid Growth Investments
Total operating expenses for the fourth quarter reached $35.15 billion, up 40% year-over-year. Meta projects full-year 2026 expenses between $162 billion and $169 billion, with the majority of growth driven by infrastructure costs, including third-party cloud spending and higher depreciation expenses.
Employee compensation represents the second-largest expense category, reflecting investments in technical talent to support priority areas, particularly AI development. The company ended 2025 with 78,865 employees, representing a 6% year-over-year increase.
Reality Labs Continues Heavy Losses
Meta's Reality Labs division reported an operating loss of $6.02 billion in the fourth quarter while generating $955 million in sales. The virtual reality unit has accumulated nearly $80 billion in total operating losses since late 2020, though Zuckerberg indicated 2026 should mark "the peak of Reality Labs' losses."
The company recently laid off more than 1,000 Reality Labs employees as part of a strategic shift toward AI and wearable devices like the Ray-Ban Meta smart glasses. Despite the cuts, Meta maintains its commitment to VR development while acknowledging regulatory and legal challenges that could impact future performance.
Market Position Strengthens Despite Challenges
Meta's cash position remains robust with $81.59 billion in cash, cash equivalents, and marketable securities as of December 31, 2025. The company generated $14.08 billion in free cash flow during the fourth quarter, though full-year free cash flow of $43.59 billion declined from $52.1 billion in 2024 due to increased capital investments.
The company faces ongoing regulatory scrutiny in both the European Union and United States, with multiple trials scheduled for 2026 related to youth safety issues. Meta acknowledged these legal proceedings "may ultimately result in a material loss," though the company continues to adapt its advertising offerings to address regulatory concerns.
Mentioned tickers: META
