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Article Highlights
- Meta Platforms’ Q4 results beat expectations, and its Q1 guidance points to faster growth than analysts anticipated.
- Stronger engagement and rising ad impressions suggest the company’s AI-driven ad tools are translating into revenue momentum.
- Investors largely shrugged off higher 2026 spending plans as growth regained the spotlight.
After months of being down and out, Meta Platforms (NASDAQ: META) may have just changed the narrative around its business in a big way. In October, the Magnificent Seven stock tanked 11% after its Q3 earnings report, driven by fears of out-of-control artificial intelligence (AI) spending.
However, the company looks to have redeemed itself with its Q4 2025 earnings report, released on Jan. 28. The stock was up approximately 8% in after-hours trading as of 7:00 p.m. ET. Meta is forcing skeptics to reassess the company’s outlook, with growth now taking center stage over spending worries.
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Meta Posts Strong Beats and Stellar Guidance
During Q4, Meta posted revenue of $59.9 billion, or growth of approximately 24%. This meaningfully surpassed estimates of $58.3 billion, or 21% growth. The company’s adjusted earnings per share (EPS) of $8.88 was also highly impressive. The figure grew by almost 11% from the prior year, and walloped estimates of $8.16.
However, by far the most impressive headline figure Meta provided was its guidance for Q1 2026. At the midpoint, Meta expects to generate $55 billion in revenue, significantly above the $51.3 billion analysts expected.
This midpoint figure implies that Meta’s revenue will grow by a whopping 30% next quarter. For perspective, this would mark the company’s fastest growth rate since Q3 2021.
This acceleration in growth was exactly what Meta shareholders wanted to see, providing further evidence that the company’s AI investments are working.
Among Meta’s underlying key performance indicators, ad impressions delivered growth stood out. Ad impressions delivered measures the ads that the company displayed on its social media platforms during the quarter. That figure grew by 18%, its highest growth in almost two years. CFO Susan Li noted that strong engagement and user growth were the primary drivers of this. For example, Meta stated that watch time on Instagram Reels was up 30% year-over-year, a strong sign of increased user engagement.
Higher engagement is a great sign for Meta. It shows that the company’s AI-powered recommendation and ranking models, which decide what content to show users and when, are improving. As these models improve, users spend more time on Meta’s apps, allowing them to deliver more advertisements.
Markets Brush Off Higher than Expected Spending Forecasts
Expectations around soaring capital expenditure (CapEx) at Meta have been the main overhang on the stock over recent months. Compared to already high expectations, Meta’s CapEx guidance trounced forecasts.
In 2026, Meta expects to spend between $115 billion and $135 billion on CapEx. Wall Street had penciled in a figure around $110 billion. At the midpoint, Meta’s CapEx guidance represents a 73% increase versus 2025 CapEx of $72.2 billion.
Meta is also forecasting total expenses of $162 to $169 billion in 2026. This figure was also significantly above estimates of approximately $150 billion.
Reading between the lines provides one more very important detail around Meta’s 2026 outlook. Management said, “Despite the meaningful step up in infrastructure investment, in 2026, we expect to deliver operating income that is above 2025 operating income.”
Note that: Revenue = Operating Income + Total Expenses
We know Meta expects to generate more (or at least the same) operating income in 2026 as in 2025. We also know their 2026 expense guidance. Thus, one can calculate a 2026 revenue estimate.
Meta generated $83.3 billion in operating income during 2025, and the high end of its expense guidance is $169 billion. Adding these figures equates to $252.3 billion, a rough estimate of Meta’s full-year 2026 revenue. This would represent an approximately 25.5% growth rate versus Meta’s full-year 2025 revenue of $201 billion. This is much higher than the approximately 18.3% growth rate analysts forecasted for 2026.
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Growth Overshadows Spending as Meta’s AI Strategy Sinks Its Teeth In
While Meta’s expense guidance seemed to be the biggest factor that investors would care about, the company transcended these numbers through its very strong growth projections. Many lament that Meta has not developed a top-tier general-purpose AI model, but the company’s numbers speak for themselves.
Meta’s AI strategy is working, accelerating growth in the most important part of its business: social media advertising. After a difficult few months, Meta Platforms may have just delivered exactly what it needed to reignite investor optimism.
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