Meta Platforms delivered a standout fourth quarter, with revenue climbing 24% year-over-year to $59.9 billion and adjusted EPS rising 11% to $8.88, comfortably beating consensus forecasts. Advertising revenue remained the engine of growth, driven by improved ad impressions in North America and aggressive AI-driven targeting tools. While ad pricing growth has begun to decelerate in the U.S. and Asia—reflecting softer consumer spending and tougher year-ago comparisons—overall ad volumes continue to expand, underpinning the company’s Buy rating. Investor confidence was further buoyed by management’s report of sequential acceleration in daily active user engagement across Facebook and Instagram, suggesting sustained demand for its core social media platforms.

Reality Labs posted a $2.207 billion operating loss in 2025, nearly flat with the prior year’s $2.146 billion shortfall. In response, Meta plans to cut approximately 1,500 positions within the division and shutter three virtual reality game studios, redirecting a portion of those savings toward its nascent wearables business. Despite continuing operating losses at similar levels to 2025, the company expects these restructuring actions and a strategic pivot to smart glasses to improve overall segment efficiency. Management’s decision to reallocate capital away from underperforming metaverse projects underscores a disciplined focus on long-term profitability and resource optimization.

Meta has guided 2026 GAAP expenses of $162–$169 billion—up 38–44% year-over-year—and capital expenditures of $115–$135 billion, marking a 65–94% increase as the company accelerates AI infrastructure build-out. As of December 2025, net property, plant and equipment stood at $98 billion, reflecting heavy investment in servers and networking. Analysts at JPMorgan forecast 2026 revenue growth of 25.5%, tapering to 17% in 2027, while projecting Reality Labs losses peaking near $19.7 billion. Non-cancelable contractual commitments jumped to $131 billion, highlighting long-term capacity agreements. Despite this elevated spending, management expects operating income to exceed 2025 levels, banking on AI-driven ad enhancements and new monetization avenues to drive margin expansion in the year ahead.