Meta posts stronger-than-expected Q4 results though costs continue to soar

Meta’s Q4 Profits Soar Past Expectations on Strong Ad Revenue

Meta delivered robust fourth-quarter results that exceeded Wall Street forecasts, driven primarily by stronger-than-anticipated advertising revenue. The company reported earnings of $22.77 billion, or $8.88 per share, marking a 9% increase from $20.84 billion, or $8.02 per share, in the same period last year.

The social media giant’s revenue climbed 24% to $59.89 billion, up from $48.39 billion in the previous year’s fourth quarter. These results handily beat analyst expectations, which had projected earnings of $8.21 per share on revenue of $58.5 billion, according to FactSet polling data.

“Once again, Meta surpassed analysts’ earnings expectations for the quarter, cementing its position as one of the world’s most dominant media companies,” said Debra Aho Williamson, chief analyst at Sonata Insights. She noted that this performance provides Meta with a solid foundation to continue its ambitious investments in artificial intelligence technologies.

The company’s impressive performance comes amid increased competition in the digital advertising space from players like TikTok and changing privacy policies that have affected targeted advertising capabilities across the industry. Despite these challenges, Meta’s core advertising business has shown remarkable resilience.

However, Meta’s expenses rose significantly, increasing 40% to $35.15 billion in the fourth quarter. This aligns with the company’s earlier warnings about substantially higher spending in the coming year as it aggressively invests in artificial intelligence development.

Looking ahead, Meta provided an optimistic forecast for the current quarter, projecting revenue between $53.5 billion and $56.5 billion, surpassing the analyst consensus of $51.4 billion. The company’s long-term expense outlook is particularly noteworthy, with Meta estimating costs between $162 billion and $169 billion for 2026, driven primarily by massive infrastructure investments and compensation packages for AI specialists.

These projected expenditures reflect CEO Mark Zuckerberg’s strategic pivot toward artificial intelligence and the metaverse, which has required substantial capital investment in both technology infrastructure and specialized talent. Meta has been recruiting AI experts at premium salary levels, part of a talent war in Silicon Valley where specialists in machine learning and related fields command increasingly higher compensation packages.

The company’s workforce grew modestly to 78,865 employees by the end of the quarter, representing a 6% increase year-over-year. This measured approach to headcount expansion comes after Meta underwent significant layoffs in 2022 and 2023 as part of broader cost-cutting initiatives.

Investors responded enthusiastically to the results, sending Meta’s stock up $73.15, or 10.9%, to $741.88 in after-hours trading. This positive reaction suggests confidence in Meta’s ability to balance substantial AI investments with continued growth in its core business.

Meta’s strong performance comes at a time when tech giants face increasing regulatory scrutiny worldwide. The company continues to navigate antitrust concerns in multiple jurisdictions while addressing content moderation challenges across its platforms, which include Facebook, Instagram, and WhatsApp.

The results also indicate that Meta has largely weathered the disruption caused by Apple’s privacy changes implemented in 2021, which initially hampered the company’s ability to track users across applications and websites, affecting ad targeting capabilities.

For investors, Meta’s ability to exceed expectations while committing to transformative investments represents a vote of confidence in Zuckerberg’s long-term vision, even as the company continues to allocate billions toward metaverse and AI technologies that may not yield immediate returns.