Social network operator Meta Platforms (NASDAQ: META) reported Q4 CY2025 results exceeding the market’s revenue expectations, with sales up 23.8% year on year to $59.89 billion. On top of that, next quarter’s revenue guidance ($55 billion at the midpoint) was surprisingly good and 7.1% above what analysts were expecting. Its non-GAAP profit of $8.88 per share was 8.6% above analysts’ consensus estimates.

Is now the time to buy META? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Meta’s fourth quarter delivered results ahead of Wall Street expectations, with management attributing the upside to robust advertiser demand, continued improvements in AI-powered ad targeting, and engagement gains across the company’s core social platforms. CEO Mark Zuckerberg emphasized that Meta’s AI-driven recommendation systems and new ad products were key contributors, noting a “major AI acceleration” that is beginning to unlock new user and business experiences. CFO Susan Li added that optimizations in both feed and video surfaces on Facebook and Instagram drove meaningful increases in engagement and monetization.

Looking forward, management’s guidance reflects strong expectations for further gains from AI investments, ongoing product rollouts, and infrastructure expansion. Zuckerberg stated that 2026 is expected to be a pivotal year for “personal superintelligence,” with new AI models and agentic products set to launch across Meta’s ecosystem. Li highlighted that upcoming improvements to ad ranking systems, increased training data, and further integration of AI into business messaging are expected to drive both engagement and revenue growth, even as the company navigates regulatory and investment headwinds.

Key Insights from Management’s Remarks

Meta’s management pointed to AI-driven improvements, product innovation, and stronger advertiser demand as central to the quarter’s performance, while also highlighting ongoing investment in infrastructure and new business lines.

• AI-powered ad optimization: Meta credited its advanced AI ad ranking and delivery systems, including model consolidations and the GEM foundation model, for lifting ad conversion rates and increasing monetization efficiency across Facebook and Instagram.

• Content and engagement gains: Improvements to content recommendations and the prevalence of original content, especially on Instagram and Threads, led to higher user engagement, with Threads seeing a 20% increase in time spent thanks to recommendation system upgrades.

• Expansion of business messaging: Paid messaging on WhatsApp surpassed a $2 billion annual run rate, and click-to-message ads in the U.S. grew more than 50% year over year, as Meta continued to roll out business AI features to new markets.

• Wearables and immersive experiences: Sales of Meta’s smart glasses more than tripled year over year, and the company is prioritizing investment in glasses and wearables while aiming to make VR a profitable ecosystem over time.

• Infrastructure and talent investment: Meta made significant investments in data centers, servers, and AI technical talent, underpinning its push to scale MetaCompute and support future AI model development, while also pursuing efficiency in infrastructure and supply chain operations.

Drivers of Future Performance

Meta expects continued momentum in 2026, with AI advancements, advertiser demand, and infrastructure growth driving guidance, but regulatory and expense headwinds remain key considerations.

• Ongoing AI model rollout: Management expects new AI models and tools to further enhance both user personalization and advertiser efficiency, with upcoming launches across Meta’s family of apps as well as new agentic shopping and content formats.

• Rising infrastructure expenses: Significant increases in infrastructure and technical talent spending are planned to support AI scaling and new product development, with management acknowledging that these costs will pressure margins but are necessary for long-term competitive positioning.

• Regulatory and legal headwinds: The company highlighted ongoing scrutiny in the U.S. and Europe, particularly regarding data privacy and youth issues, as potential risks that could impact product rollouts and monetization, especially given new requirements for less personalized ads in the EU.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be monitoring (1) the pace and impact of new AI product launches and their effect on user engagement, (2) execution on infrastructure investments and improvements in cost efficiency, and (3) regulatory developments in key markets, particularly around privacy and ad personalization in the EU and U.S. Progress in scaling business messaging and monetization of new content formats will also be critical signposts.

Meta currently trades at $713.06, up from $667.88 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).

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