Meta Platforms Inc. has reported fourth-quarter financial results for 2025 that surpassed Wall Street expectations, even as the company continues to invest billions into artificial intelligence infrastructure. The strong performance sent the company's stock price up, signaling investor confidence in its strategic shift towards AI.
The technology giant posted revenues of $59.89 billion for the final quarter of 2025, exceeding analysts' forecasts of $58.59 billion. This financial success comes at a time when Meta is also navigating significant operational changes, including a decreased focus on its metaverse division and increased scrutiny over its growing network of data centers.
Key Takeaways
- Meta's Q4 2025 revenue reached $59.89 billion, beating Wall Street estimates.
- The company plans to spend between $162 billion and $169 billion in 2026, primarily on AI infrastructure.
- A strategic pivot from the metaverse is evident, with over 1,000 layoffs in the Reality Labs division.
- CEO Mark Zuckerberg is set to testify in a major trial concerning social media's impact on young people.
Financial Performance Defies High Spending
Meta's financial report on Wednesday revealed an earnings per share (EPS) of $8.88, which was higher than the anticipated $8.23. Following the announcement, the company's stock value increased by nearly 10% in after-hours trading, reflecting a positive market reaction to the news and its forward-looking strategy.
The strong earnings report provides a financial cushion as Meta embarks on what CEO Mark Zuckerberg described as a "major AI acceleration." The company has outlined a spending plan for 2026 projected to be between $162 billion and $169 billion. A significant portion of this capital is allocated to infrastructure costs to support its expanding AI ambitions.
The Vision for a Personal AI
During an earnings call, Zuckerberg detailed his vision for the future of Meta's products, emphasizing a move toward what he calls "personal superintelligence." This strategy involves deeply integrating large language models (LLMs) with the existing recommendation systems that power Facebook, Instagram, and Threads.
"Today, our apps feel like algorithms that recommend content," Zuckerberg explained. "Soon, you’ll open our apps and you’ll have an AI that understands you and also happens to be able to show you great content or even generate great personalised content for you."
This initiative aims to transform user interaction from passive content consumption to a more personalized, AI-driven experience. To support this, Meta is aggressively hiring new talent focused on AI development.
A Strategic Pivot from the Metaverse
While Meta goes all-in on artificial intelligence, its once-central focus on the metaverse appears to be diminishing. The company initiated layoffs for more than 1,000 employees within its Reality Labs division this week, representing approximately 10% of the unit's workforce.
Reality Labs by the Numbers
The Reality Labs division, responsible for Meta's metaverse and VR hardware, reported a loss of $6.02 billion on $955 million in sales during the fourth quarter. Despite the losses, Zuckerberg noted that sales of Meta's smart glasses more than tripled last year, indicating that wearables will remain a key focus.
Zuckerberg confirmed that he expects financial losses from Reality Labs to continue at a similar rate as the previous year. The future investment in this area will be concentrated on glasses and other wearable devices, moving away from the broader, more immersive virtual worlds previously championed.
The Growing Pains of AI Infrastructure
Meta's aggressive expansion into AI requires a massive physical footprint, primarily in the form of data centers. This expansion is facing increasing political and environmental scrutiny.
To build out its network, Meta recently announced a deal with materials manufacturer Corning worth up to $6 billion for the supply of fiber optic cables. However, the energy consumption of these facilities has raised concerns among lawmakers.
Legislative Pushback
States are beginning to take action over the environmental and economic strain of data centers. Georgia is considering a temporary ban on new data center construction, while Maryland and Oklahoma are exploring similar legislative measures. At the federal level, Democrats in Congress are investigating whether the high utility costs of these centers are being passed on to consumers.
In response, Meta has launched a public relations campaign to highlight the economic benefits of its data centers. The company spent $6.4 million on ads in November and December, claiming its facilities have supported 30,000 skilled trade jobs during construction and 5,000 operational roles. However, reports suggest these facilities often create few permanent jobs once construction is complete.
Legal Challenges on the Horizon
Adding to the company's challenges, CEO Mark Zuckerberg has been ordered to testify in a landmark trial that began this week. Meta, along with other major technology firms, faces allegations that it intentionally designed its social media products to be addictive and harmful, particularly to young users.
This trial marks the first time tech executives will have to answer these accusations in open court. While Zuckerberg has previously testified before Congress, facing questioning from experienced prosecutors is expected to be a more rigorous ordeal. The CEO did not address the upcoming trial during the recent earnings call, keeping the focus squarely on the company's financial performance and AI-driven future.