Meta Plans on Doubling AI Investment in 2026

Meta’s (Nasdaq: META) fourth quarter results outpaced market expectations and sent the stock soaring 10% in the after-hours trading session. The company continues to invest heavily in AI infrastructure and recently announced several partnerships to the effect.

Meta’s Financials

Meta’s fourth quarter revenues grew 24% to $59.9 billion, ahead of the Street’s expected $58.6 billion. EPS of $8.88 was also significantly ahead of the market’s estimate of $8.23.

Meta’s advertising business generated revenue of $58.1 billion and Reality Labs recorded revenues of $955 million.

Among key metrics, Meta reported a Daily Active User base of 3.58 billion across its apps, growing 7% over the year.

Meta ended the year with revenues growing 22% to $200.97 billion and an EPS reducing 2% to $23.49.

For the first quarter, Meta expects revenues of $53.5-$56.5 billion, ahead of analyst estimates of $51.41 billion. Meta expects to incur AI related capital expenditures of $115-$135 billion this year, ahead of market expectations of $110.7 billion. Expected capex is more than double the $72.2 billion that Meta spent in 2025.

Meta justified the increased spending on the need to continue to support its Meta Superintelligence Labs efforts and core business. Earlier this year, Meta announced lay-offs impacting more than 1,000 Reality Labs employees who worked on VR-related initiatives as it shifted resources to AI and related wearable devices.

Meta’s Social Media Hurdles

Meta’s usage statistics may be improving year on year, but the company is facing significant regulatory concerns. Last December, Australia banned anyone under 16 years of age to have or manage a social media account. The move was in rise to the growing concern of the impact of social media on the minds of the youth. By mid January, Meta had already removed over 550,000 on account of the ban.

Social media companies like TikTok, Snap and Facebook are not happy with the move, but it is a sign of things to come. Other countries are already following suit with Malaysia and Spain barring accounts starting this year. Reports suggest that Greece, France, and Denmark will begin implementing their restrictions in the year as well while others like Singapore are evaluating their plans on implementing similar restrictions.

Earlier this month, Mark Zuckerberg was also asked to testify about child safety in front of a jury. Meta maintains that their apps have been designed so as to not be addictive to users, but studies have shown differently. The trial is the first of a consolidated group of cases that includes over 1,600 plaintiffs, 350 families, and over 250 school districts who are arguing that the owners of Instagram, YouTube, TikTok, and Snap are knowingly designing addictive products harmful to young users’ mental health.

Prior to him, Adam Mosseri, the head of Meta’s Instagram, was also asked to testify if he believed that people could be clinically addicted to social media platforms. Mr. Mosseri denied that possibility and maintained that Instagram was working hard to protect young people using the service.

It remains to be seen what comes off of the hearing, but this was the first time that Mr. Zuckerburg sat before a jury, under oath, and explained why Meta released a product its own safety teams warned were addictive and harmful to children.

Meta’s AI Investments

Meta is bullish on its AI potential and expects the current year to be the one where AI deployment accelerates on several fronts. Over the coming months, it is going to start shipping its new AI-models and products aimed at building “personal superintelligence”. Meta had released its Llama 4 model last year, but the product was not received well in the market.

Since then, Meta has been testing a new model and Llama successor under the code Avocado. Details of the new model are not publicly disclosed, but reports suggest that Meta is currently dealing with training-related performance testing on the model to ensure that the system is well received when it debuts. Unlike Llama, which was made freely available so third-party researchers and others could access the tools and ultimately improve them, Avocado is expected to be a proprietary model and would not allow outside developers to be able to freely download its components.  

Meta believes that it will be able to leverage AI to provide a uniquely personal experience to its users. It is working on merging LLMs with the recommendation systems that power Facebook, Instagram, Threads, and the ad system to drive meaningful growth across apps and ads business. Instead of just helping people stay connected and find interesting content, the AI engine will help understand people’s unique personal goals and customize feeds to these individual needs.

Today, Meta ads help businesses find the very specific people who are interested in their products. With agentic shopping tools, consumers will be able to find the very specific products from the businesses. Meta is focused on making these experiences work across both feeds and business messaging. Additionally, AI will help improve the kinds of immersive content available to users. Advances in AI will allow for more interactive feeds instead of algorithms.

Besides delivering on personal superintelligence, Meta is focusing 2026 on building infrastructure for the future. As part of that initiative, it announced partnerships with both Nvidia and AMD to support build-out of data centers optimized for AI training and inference. Within a few days of signing up with Nvidia, Meta also announced a multi-year deal with AMD to deploy up to 6 gigawatts of GPUs for AI data centers. Read Meta Pours Funds into AI Capacity Build-out

Meta’s stock is trading at $637.25 with a market capitalization of $1.6 trillion. It hit a 52-week high of $796.25 in August and has climbed from the 52-week low of $479.80 that it had fallen to in April.

Disclosure: All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article. I am an investor in this company.

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