Meta’s AI Ambitions Pay Off as Q4 Earnings Soar
Spending Surge Drives Growth
Meta Platforms (META) shares surged over 4% in extended trading on Thursday, following the release of its fourth-quarter earnings report, which exceeded Wall Street estimates. The company’s significant investments in artificial intelligence (AI) are paying off, with analysts predicting long-term growth for Meta stock.
AI-Driven Advertising to Boost Revenue
Analysts expect Meta’s AI-driven advertising to drive revenue growth in 2025. Deutsche Bank analyst Benjamin Black noted that as data center capacity comes online throughout the year, Meta will be able to leverage its infrastructure to train its latest foundational models and support its core platform, driving near-term revenue growth durability.
Operating Expenses to Rise
Meta’s outlook for 2025 operating expenses came in higher than expected, with plans to hike capital spending to $60 billion to $65 billion. However, analysts believe the company has earned the right to invest in its AI ambitions, including its pursuit of artificial general intelligence (AGI).
Competition Heats Up
China’s DeepSeek has emerged as a new rival in building AI systems, while startup OpenAI is also pursuing AGI. Despite this, Meta indicated on its earnings call that it has no plans to pull back on capital spending.
Strong Q4 Performance
Meta reported a 50% increase in earnings to $8.02 per share, while revenue climbed 21% to $48.38 billion. Digital advertising accounts for most of Meta’s revenue, with ad impressions up 6% in Q4 and average price per ad up 14%.
Positive Outlook
Analysts maintain a positive view of Meta’s prospects, with Bank of America analyst Justin Post noting that the company sent a positive tone on its “exciting product roadmap” for Meta AI, Llama, and Meta AI glasses.
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