Meta Platforms Inc. beat Wall Street’s expectations today as it delivered its fourth-quarter financial results, following up with bullish guidance for first-quarter sales, sending its stock higher in extended trading.

The social media giant reported earnings before certain costs such as stock compensation of $8.88 per share on revenue of $59.89 billion, up 24% from the same period one year earlier. Those numbers were impressive, easily beating the Street’s targets of $8.23 per share in earnings and $58.59 billion in revenue. Net income for the period ended at $22.76 billion, up from $20.83 billion one year earlier.

The company’s advertising business accounted for the vast majority of its revenue in the quarter, generating sales of $58.1 billion, or 97% of the total. Meta added that it ended the quarter with 3.58 billion daily active people across its application ecosystem, which includes Facebook, Instagram, Messenger and WhatsApp.

Meta Chief Financial Officer Susan Li said the company is aiming for revenue of between $53.5 billion and $56.5 billion in the current quarter, well ahead of the Street’s $51.41 billion consensus estimate. The forecast is “underpinned by the strong demand that we saw through the end of quarter four and continuing into the start of 2026,” she explained.

In addition to its revenue guidance, Meta provided a forecast for its total expenses in fiscal 2026, saying it expects this to come to between $162 billion and $169 billion. Most of that money will go toward the capital expenditures for Meta’s ongoing artificial intelligence push, which requires massive investment in data center resources. Li said capex is expected to fall between $115 billion and $135 billion this year, ahead of the analyst’s forecast of $110.7 billion. The midpoint of Meta’s guidance range is almost twice as much as the $72.2 billion it spent on capex in 2025.

According to Li, the increased capex budget is necessary because of the “year-over-year growth driven by increased investment to support our Meta Superintelligence Labs efforts and core businesses.”

Meta founder and Chief Executive Mark Zuckerberg (pictured) allowed Li to discuss the finances, but he piped up when asked about the company’s progress on the technology side. He told analysts that the company is expecting Superintelligence Labs to release its first AI models “in the coming months.”

“I expect our first models will be good, but more importantly, we’ll show the rapid trajectory that we’re on,” Zuckerberg said. “And then I expect us to steadily push the frontier over the course of the year, as we continue to release new models.”

Investors have big expectations for Superintelligence Labs, which was established as part of a major restructuring of Meta’s AI efforts. The company has thrown serious money at the endeavor, including the $14.3 billion it invested in the AI startup Scale AI Inc., as part of a deal to acquire the services of its founder Alexandr Wang, who now leads Superintelligence Labs.

Wang has been tasked with overseeing the development of a new generation of more powerful AI models, following the tepid response to Meta’s Llama 4 model. Most analysts believe that Llama is no match for the most advanced models of competitors such as OpenAI Group PBC, Google LLC and Anthropic PBC. That suggests Meta is falling behind, as earlier iterations of Llama were generally thought to be more or less as capable as those released by its rivals.

Reports indicate that Meta has been testing a new frontier model code-named Avocado that’s designated as the successor to Llama 4, and it’s thought that the company wants to launch it in the first half of the year.

“In our view Meta has a solid chance of generating a return on their sizable AI investment based on the much better than expected early returns by taking advantage of its heavy investment in equipment/talent, existing relationship with ~3.6 billion users, large amounts of data and proven ability to create new product categories,” Pivotal Research Inc. analyst Jeff Wlodarczak said in a note to clients. “In the end we see a strong revenue growth outlook from increased usage/new products/better targeting/higher prices ultimately boosted by cost efficiencies (enabled by AI) and eventually materially declining Reality Labs losses combined to drive materially faster EBITDA/free cash flow growth with what appears to be an attractive valuation.”

AI is not the only money pit Meta has to contend with. The company reported that its Reality Labs unit, which is focused on metaverse technologies such as virtual reality headsets, recorded an operating loss of $6.02 billion in the quarter, while generating just $955 million in revenue. That’s worse than expected, with the Street forecasting an operating loss of $5.67 billion. Since launching in late 2020, the Reality Labs unit has racked up almost $80 billion in total operating losses.

Meta’s failure to stem the bleeding apparently has prompted Zuckerberg to take action at last. Earlier this month, the unit laid off more than 1,000 employees who had been working on virtual reality projects, including some of its internal studios. The layoffs were characterized as a shifting of resources to AI and wearable devices such as the Ray-Ban Meta smart glasses.

Though Meta is forecasting more of the same for Reality Labs in fiscal 2026, Zuckerberg told analysts on the call that he expects that its losses will peak this year, before gradually falling in future years.

Meta’s stock initially gained more than 10% on the back of today’s report, before falling slightly to settle at a 7% gain. That means the stock is up just over a percentage point in the year to date, more or less in line with the broader S&P 500 index.

Photo: Anthony Quintano/Flickr