Meta Surges 8% on Q4 Beat, Plans $135B AI Buildout
Meta crushes earnings expectations with $8.88 EPS, guides Q1 revenue above estimates. Zuckerberg announces massive AI infrastructure push.
Meta Platforms delivered a monster Q4 on Wednesday night, beating on every metric that matters and guiding Q1 well above expectations. Shares jumped 8% in after-hours trading.
The real headline: Meta is doubling down on AI infrastructure with a 2026 capex budget that could reach $135 billion—nearly twice what it spent in 2025.
The Numbers
Fourth-quarter earnings came in at $8.88 per share versus the $8.23 analysts expected. Revenue hit $59.89 billion against estimates of $58.59 billion. Both figures represent year-over-year increases of roughly 24%.
For Q1 2026, Meta guided revenue between $53.5 billion and $56.5 billion. The midpoint of $55 billion sits well above the $51.41 billion consensus. That's the kind of guidance that moves stocks after hours.
Daily active people across Meta's family of apps reached 3.58 billion, matching expectations. Ad impressions rose 18% year-over-year while average ad prices increased 6%. The core business remains a cash machine.
The AI Bet
Meta plans to spend $115 billion to $135 billion on capital expenditures in 2026. Analysts had expected around $110 billion. The extra $25 billion at the high end represents a meaningful acceleration of AI infrastructure investment.
Most of that spending will go toward what Meta calls "Superintelligence Labs"—the company's effort to build more capable AI models. CEO Mark Zuckerberg said on the earnings call that 2026 will bring a "major AI acceleration" as Meta races to catch up with OpenAI, Google, and Anthropic.
The company fell behind on AI model quality in 2025. Llama 3 didn't match GPT-4's capabilities, and Llama 4's launch got delayed. Zuckerberg is betting that infrastructure investment can close the gap.
Reality Labs: Still Bleeding
Meta's metaverse division logged another $6 billion operating loss on $955 million in revenue. That brings total Reality Labs losses since late 2020 to nearly $80 billion.
The market has largely stopped caring about these losses. Meta's advertising business generates enough cash to fund the metaverse experiment indefinitely while also financing the AI buildout. The question isn't whether Meta can afford it—it's whether either bet will pay off.
For now, investors are giving Zuckerberg the benefit of the doubt. The stock has recovered from its early-2026 weakness and trades within 10% of all-time highs.
What It Means for Markets
Meta's results set the tone for what traders should expect from megacap tech this earnings season. Revenue growth remains strong. AI spending continues to accelerate. Margins are holding up despite the investment surge.
The Magnificent Seven earnings reckoning we previewed is playing out with a clear winner on night one. Meta delivered exactly what bulls needed: proof that AI spending is producing advertising revenue gains, not just burning cash.
Apple reports Thursday afternoon. The comparison will be instructive. Unlike Meta, Apple hasn't dramatically increased AI infrastructure spending. Unlike Meta, Apple's core business is showing strain in certain markets.
For traders watching the tech megacaps, Meta just raised the bar. A strong Q4 with aggressive forward guidance—that's the template. Anything less will disappoint.