Meta’s earnings sent a clear signal to Wall Street on Wednesday. Although the company’s core ad engine is still running at full capacity, the price tag on CEO Mark Zuckerberg’s AI ambitions will skyrocket by 2026.
The company reported fourth-quarter 2025 revenue of $59.89 billion, beating Wall Street expectations. Meta’s stock price rose as much as 10% in after-hours trading.
Meta has revealed how much effort it intends to make in 2026, along with encouraging numbers. The company expects to spend $115 billion to $135 billion in capital spending next year, mostly in the computers and data centers that power its AI.
In other words, Meta still makes most of its revenue from advertising. The company is plowing extraordinary amounts of money into the race to build more powerful AI and weave it into Instagram, WhatsApp, Facebook, and virtual and augmented reality products that more than 3.5 billion people around the world use together every day, and it’s asking investors to stay on board.
Here are five takeaways from Meta’s Q4 2025 earnings call.
Meta’s AI spending plans expand further
Meta said to prepare for even higher prices in 2026 as it pumps money into the computing and data centers needed to power AI. The company said it expects capital spending to be between $115 billion and $135 billion in 2026, nearly double the $72 billion in 2025.
Meta Chief Financial Officer Susan Lee said the increased spending will support the Meta Superintelligence Lab’s efforts and core business.
Mr Lee also warned that Meta’s overall costs are expected to rise rapidly. The company expects total expenses to be between $162 billion and $169 billion in 2026, with most of the increase coming from “infrastructure costs,” including “third-party cloud spending, increased depreciation and amortization, and increased infrastructure operating expenses.”
And Meta isn’t just buying more machines, it’s also paying the people to run them. Mr Lee said the “second largest driver” of cost increases was compensation, which would be driven by “investments in technical talent”, including hiring in “priority areas, particularly AI”.
Meta’s ad machine still does the heavy lifting
Advertising once again powered Meta’s quarter. The company reported advertising revenue of $58.14 billion in the fourth quarter of 2025, an increase of 24% from the same period last year. This growth was driven by a combination of showing more ads (ad impressions up 18% year over year) and paying a little more per ad (average price per ad up 6%).
When analysts pressed Zuckerberg on whether Meta could build a meaningful business beyond advertising, given how much money it has poured into AI, he didn’t shy away from the question of dependence.
“Advertising will be by far the most important driver of growth for our business over the next few years,” Zuckerberg said, adding that Meta is working on new bets alongside its core engine.
Meta’s pitch is that investments in AI are already improving the ad machine’s capabilities, not just by targeting, but by improving the systems that make decisions. which one Ads that people are most likely to be interested in.
The company announced that its AI tools for creating video ads have reached a revenue run rate of $10 billion. The company also says its new measurement product has helped advertisers drive 24% more conversions than standard methods, reaching billions of dollars in annual run rates in just seven months.
Reality Labs remains a drag
Reality Labs, the division behind Meta’s virtual reality and augmented reality efforts, continued to lose cash in the final quarter of 2025. The division lost $6.02 billion in the quarter, the highest ever, and lost $19.19 billion in 2025. The numbers highlight how much Meta’s ambitions to build immersive worlds still depend on ad revenue.
Despite laying off about 1,500 people at Reality Labs earlier this month, Mehta told investors not to expect a sudden turnaround. Lee said the company expects Reality Labs’ operating loss in 2026 to remain “on par with 2025 levels.”
Mr. Zuckerberg is trying to reposition what Reality Labs is building. The company’s focus has shifted from going all-in on the Metaverse to building AI-powered smart glasses and experiences that can be implemented within Meta’s existing apps.
When Barclays analyst Ross Sandler asked about Meta’s plans to bring Horizon Worlds, a virtual hangout zone accessible with the company’s Quest VR headset, to mobile, Zuckerberg said he expected more “interactive and immersive” content formats to appear directly within the feed of Meta’s existing apps.
He added that people might be able to use AI to create games with a single prompt and share it on their feed so others can “jump right into the game.”
He positioned Horizon Worlds as a natural fit for an “immersive 3D” version of that idea, saying that Meta’s work on VR software and Horizon, combined with advances in AI, could bring this type of experience to “hundreds of millions, billions of people through mobile.”
Meta’s AI strategy: Build models instead of renting them
Meta isn’t just trying to sprinkle AI capabilities into Facebook and Instagram. Mr. Zuckerberg is making an even bigger claim. If Meta wants to shape the next generation of consumer technology, it needs to control the underlying AI and not just rely on what its competitors sell.
This is also the framework behind his public promotion of “individual superintelligence”, which he has once again called as a key focus for 2026.
When Wells Fargo analyst Ken Gawlerski asked how important it was for Meta to have a universal model, Zuckerberg asserted Meta’s identity as a “deep technology company.”
Meta is able to build everything it does “because we build and control the underlying technology,” he said. That way, Meta can “design the experience we want, not just be constrained by what other companies in our ecosystem are building or what they allow us to build,” Zuckerberg added.
He suggested that relying on external models could become dangerous over time, citing competitive and safety reasons. That’s why it’s important for Meta to have its own model, he said, both from a business perspective and because Meta wants to “actually design and build the experiences that we think should be built for people.”
More AI with fewer layers
Zuckerberg has pitched 2026 as the year that AI will change not only Meta’s products, but also the way Meta itself operates. On the conference call, he said 2026 will be “the year that AI begins to dramatically change the way we work,” and that the company is “investing in AI-native tools to help Meta individuals get more done.”
He also discussed intentional changes in organizational design.
“We’re elevating individual contributors and flattening teams,” Zuckerberg said, adding that Mehta is already seeing “projects that used to require large teams now being accomplished by one very talented person.”
Lee combined that cultural pitch with specific productivity claims. She said since the beginning of 2025, Meta overall has seen a “30% increase in production per engineer” and an 80% year-over-year increase in production among “power users” of its in-house AI coding tools.
The company’s implicit bet? Spend more on AI infrastructure and tools and run leaner teams that can ship more.
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