Meta Platforms’ recent guidance and the market’s reaction seemed to run counter to conventional thinking on Wall Street.
For years, investors have rewarded major technology conglomerates in the “Magnificent Seven” that announced plans to ramp up capital spending on artificial intelligence (AI) infrastructure. The thinking was that these companies would only make such a large investment if they believed it would yield strong returns.
In recent months, however, investors have begun to wonder whether returns would actually be as promising as many initially thought. Suddenly, AI investments were no longer rewarded, especially as companies began taking on debt to finance some of these ambitions.
However, it follows Metaplatforms‘ (META 2.83%) Last quarter, CEO Mark Zuckerberg said he has no plans to slow down AI investments, which the market didn’t seem to mind given Meta Stock’s strong performance following its Jan. 28 earnings release. Zuckerberg is full speed ahead, apparently to the delight of the market.
Image source: Getty Images.
A smashing quarter that shows the power of AI
If you want to prove to people that further investment in artificial intelligence is justified, show them results. That’s exactly what Meta did in its recent Q4 2025 earnings release.
The company generated profits well above consensus expectations and beat revenue by about $1.3 billion, while beating analyst expectations. Most of the performance can be attributed to advertising, which increased by approximately 24% year-over-year. Meta has invested significantly in AI to improve its advertising operations, and the steps appear to be working.
In a recent memo, Meta said it has doubled the number of graphics processing units (GPUs) used to train the company’s ad ranking model. The goal is to better choose advertisements that match the interests of the audience. Meta also uses an AI business assistant to help companies improve their ad campaigns and reach account support.
Meta also uses AI to enable more creative campaigns. The company’s video generation tools collectively achieved annual sales of $10 billion. The division also grew three times faster than the company’s total advertising business in the previous quarter. This is what the market wants to see in AI: clear monetization.
Zuckerberg has no plans to slow down
Meta indicated that AI-related investments this year will reach between $115 billion and $135 billion, higher than Wall Street consensus expectations of nearly $111 billion. The company spent just over $72 billion on capital investments in 2025.
Today’s change
(-2.83%)$-19.55
Current price
$672.15
Key data points
Market capitalization
$1.8 tons
Day range
$667.47 -$688.83
Range of 52 weeks
$479.80 -$796.25
Volume
967K
Avg. full
18M
Gross margin
82:00%
Dividend yield
0.30%
“As we plan for the future, we will continue to make significant investments in infrastructure to train leading models and deliver personal super intelligence to billions of people and businesses around the world,” Zuckerberg said during Meta’s earnings call.
The company’s investments are in Meta’s Superintelligence Labs and its core advertising businesses. The goal of the super intelligence division is to build AI solutions that can replicate and even surpass human cognitive capabilities.
How to approach meta stocks
It’s important for investors to understand that while the market has essentially given Zuckerberg the green light to move forward with AI capex, this hasn’t happened over the past year. Even after the big price move following the earnings results, Meta shares are only up about 8% over the past year (as of January 29).
It’s also important for investors to remember that Zuckerberg has a history of capitalizing on new technology, and while the famed leader has been right about a lot throughout his career, he hasn’t always been right. Meta’s Reality Labs division, which builds virtual reality hardware and software, has been a flop so far. This was the unit expected to power the Metaverse, a virtual world where Meta went all in and later changed the name to reflect it.
However, Reality Labs just reported an operating loss of over $6 billion and has incurred $80 billion in operating losses since the end of 2020. Investors should reward Meta for AI spend that drives the company’s core business, but should keep a close eye on Zuckerberg if he starts dumping money into technologies that may not appear to generate strong returns.
