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2026-01-29T14:42:30.077Z
- Meta shares rose 9% after strong fourth-quarter results highlighted the success of its advertising business.
- The advertising business was strong enough that investors were not deterred by Meta’s huge capital investment prospects.
- Analysts remain bullish on Meta’s growth prospects through 2026.
movement: Metaplatform shares rose 9% following Thursday’s results, erasing losses from the previous week. The stock price is up 10% since the beginning of the year.
why: Meta reported fourth-quarter 2025 earnings after the close of trading on Wednesday, which beat Wall Street expectations on both top-line and bottom-line metrics. Revenue was $59.9 billion, compared to expectations of $58.4 billion, and earnings per share were $8.88, compared to consensus of $8.16.
Importantly, the social media giant also revealed that it plans to spend $115 billion to $135 billion on AI next year, which is a significant increase from the $72.22 billion it spent on AI in 2025 and far more than Wall Street expected for 2026.
Wall Street reacted positively to the news, despite balking at the big spending plans announced in last quarter’s results.
The main difference this time around seems to be that the company’s quarterly ad revenue was much higher than expected. CFO Susan Lee said on the earnings call that the company’s AI efforts are likely driven by advertising success and will be funded with cash rather than debt, lending confidence in Meta’s growth plans.
what it means: The results are an important update on the AI race and show the company is successfully generating cash from other areas to fund its AI ambitions. That’s the kind of strength investors want to see after last year ended with Wall Street worried about soaring capital spending for hyperscalers.
“Continued investments across the business, including the introduction of AI capabilities into the company’s ad stack and content recommendation engine, are already delivering tangible benefits in its core advertising segments,” said Dan Ives of Wedbush Securities.
