Meta Shares Jump as Strong Revenue Outlook Eases AI Spending Fears

Meta Shares Jump as Strong Revenue Outlook Eases AI Spending Fears

Facebook owner reassures investors despite announcing higher capital spending for 2026

Shares in Meta Platforms surged after the company delivered a strong set of quarterly results and issued upbeat revenue guidance, helping to offset concerns about a sharp increase in spending on artificial intelligence in 2026. Investors focused on robust earnings, improving advertising returns and confidence in Meta’s long-term AI strategy.

Meta Stock Rallies After Earnings Beat

Meta shares rose more than 8% in pre-market trading, making it one of the strongest performers among the so-called “Magnificent Seven” technology stocks.

The rally followed a clear earnings beat for the fourth quarter, alongside guidance that exceeded market expectations. Analysts said the combination of higher profits and stronger-than-expected revenue forecasts reassured investors that Meta’s heavy AI investment is already delivering results.

Revenue Guidance Beats Expectations

For the first quarter, Meta expects revenue of $53.5 billion to $56.5 billion, comfortably ahead of analysts’ consensus forecast of around $51.3 billion.

Market strategists said this forward-looking guidance was the key driver behind the share price move. According to Steve Sosnick, chief strategist at Interactive Brokers, investors were encouraged by the fact that both earnings and near-term revenue outlooks exceeded expectations, outweighing concerns around spending.

AI Spending Set to Rise Sharply in 2026

Meta also outlined significantly higher spending plans for 2026, confirming it will continue to invest heavily in artificial intelligence and data infrastructure.

The company forecast:

• Capital expenditure of $115 billion to $135 billion in 2026
• Total expenses of $162 billion to $169 billion

Both figures came in above Wall Street forecasts, which had expected capex of around $110 billion and expenses closer to $150 billion.

Despite this, analysts were not surprised. Jefferies analyst Brent Thill noted that Meta has repeatedly flagged elevated spending needs and has a track record of issuing initial guidance that later proves conservative.

Billions Poured Into AI Infrastructure

Meta has been aggressively expanding its AI capabilities, investing billions in data centres, cloud infrastructure and advanced computing power.

Earlier this week, the company announced a $6 billion agreement with Corning to supply fibre-optic cables for its expanding data centre network. The spending supports Meta’s ambitions in what it calls its Superintelligence Labs, alongside its core advertising-driven business.

Meta said most of its cost growth in 2026 will be linked to infrastructure, including third-party cloud services and higher operating expenses.

Investor Concerns Over Debt Play Second Fiddle

Some investors have expressed concern that Meta is shifting away from its historically asset-light model and may need to borrow more to fund its investment plans.

However, early market reaction suggests those worries have taken a back seat. Analysts pointed out that Meta’s ability to charge more for advertising, combined with improving margins, has strengthened confidence in the company’s cash-generating power.

Performance Still Trails Big Tech Rivals

Despite the latest rally, Meta shares have had a relatively muted run compared with other major technology stocks.

• Year to date, the shares are up around 2%, broadly in line with the S&P 500
• In 2025, Meta rose 12.7%, underperforming the index’s 16.4% gain

Even so, investors appear increasingly willing to back Meta’s long-term strategy as AI becomes more central to its products and services.

Strong Quarterly Results Support Optimism

For the fourth quarter, Meta reported:

• Earnings per share of $8.88, above forecasts of $8.19
• Revenue of $59.89 billion, beating expectations of $58.35 billion

Chief executive Mark Zuckerberg said the company delivered strong performance in 2025 and is focused on advancing “personal superintelligence” for users worldwide in the year ahead.

Outlook

Meta’s results underline a clear message: while spending is rising sharply, revenue growth and profitability remain strong. For investors, the focus has shifted from how much Meta is spending on AI to how effectively that investment is translating into future growth.

Sources: (Investing.com, Reuters.com)