Meta (META) is set to announce fourth-quarter earnings results on Tuesday after the closing bell, and investors will watch out for the California-based company’s artificial intelligence (AI) progress and spending as well as its advertising revenue.
Wall Street expects the Facebook parent to report earnings per share of $8.18 on revenue of $58.46B during the quarter, implying an increase of 20.8% year-over-year.
Amid Silicon Valley’s intense AI battle, Meta grabbed headlines in January as the company reportedly announced a 10% cut to its metaverse staff as it continues to shift resources toward developing artificial intelligence capabilities.
Additionally, the tech giant plans to pilot new subscription models with more features and expanded AI capabilities across apps like Instagram, Facebook, and WhatsApp.
The tech firm’s CFO, Susan Li, during the Q3 earnings call, stated that capital expenditure growth will be notably larger in 2026 than in 2025 as the expenses will grow faster, primarily driven by infrastructure costs.
BofA Securities rated the stock a Buy, with a price target of $810.
“Concerns on 2026 expenses have been building for five months, and we think an expense guide at around 30% 2026 growth could be positive, while at or above 35% a negative. Other positives could be constructive commentary on NT Avocado launch, future AI video models to drive usage, and continued revenue strength,” noted BofA analyst Justin Post.
In its Q3 earnings call, the tech giant said that it expects continued strong ad revenue growth, partially offset by lower year-over-year Reality Labs revenue in Q4.
Benchmark analyst Mark Zgutowicz highlighted that Reality Labs cuts move the metaverse/VR to the back seat and smart glasses to center stage, but the loss needle does not move much yet.
Meta shares have gained nearly 1.4% over the past year, underperforming the 15.6% rise in the broader S&P 500 Index.
Still, many analysts are bullish on the stock. Seeking Alpha analysts and Wall Street rated the stock a Buy and above, while Seeking Alpha’s Quant ratings consider it a Hold.
Seeking Alpha analyst Dhierin Bechai rated the stock as Buy with a revised price target of $899, down from $905, reflecting higher CapEx and modest EBITDA estimate improvements.
“META’s capital intensity is rising, compressing free cash flow despite substantial operating cash flow and a strong balance sheet. However, Meta continues to outperform, leveraging AI to optimize ad revenue rather than launching front-end AI products,” Bechai highlighted.
Over the last three months, EPS estimates have seen 12 upward revisions versus four downward revisions, while revenue estimates have seen 41 upward revisions compared with four downward revisions.