Meta stock pops on positive outlook amid AI spending surge
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Shares in Meta jumped 10% in after-hours trading Wednesday after the company forecast higher operating income for this year, even as its costs could nearly double this year.
Why it matters: Meta has been pouring billions into AI talent and infrastructure, which executives have said is essential to the company's future and to keep the U.S. competitive in AI.
- "We are now seeing a major AI acceleration. I expect 2026 to be a year where this wave accelerates even further on several fronts," CEO Mark Zuckerberg said on the earnings call, pointing to agents, more personalized feeds, shopping tools and AI glasses.
- "We're starting to see agents really work. This will unlock the ability to build completely new products and transform how we work," he added.
By the numbers: Meta said it expects 2026 capital expenditures of between $115 billion to $135 billion. That's up from $72.22 billion in 2025.
- For the fourth quarter, Meta's capital expenditures were $22.14 billion, compared to expectations of $21.97 billion, CNBC reported citing StreetAccount.
- The company said it expected higher operating income in 2026. It reported $83.3 billion in 2025, up 20% from the prior year.
- For Reality Labs, its division focused on virtual and augmented reality, Meta reported an operating loss of $6 billion and revenue of $955 million for the quarter.
The big picture: Meta's results increasingly have been evaluated on how aggressively it's spending on its AI ambitions.
- Earlier this month, Zuckerberg announced a new "top-level" initiative called Meta Compute to build "tens of gigawatts" of AI infrastructure this decade.
- Meta said on Tuesday it would pay Corning up to $6 billion through 2030 for fiber-optic cable in its AI data centers.
Zoom in: Meta has been scaling back parts of Reality Labs. It recently laid off about 10% of that staff, primarily those who work on VR-related initiatives.
- Zuckerberg said on Wednesday's earnings call that Meta is directing more investment toward glasses and wearables and focused on improving Horizon, its VR software, for mobile and make VR profitable.
- The company has been investing more in marketing its glasses like Ray-Ban Meta and Oakley Meta, the former of which advertised in last year's Super Bowl and the latter will advertise during this year's game.
- "I think that we're in a moment similar to when smartphones arrived, and it was clearly only a matter of time until all those flip phones became smartphones. It's hard to imagine a world in several years where most glasses that people wear aren't AI glasses," Zuckerberg said.
- Snap Inc., one of Meta's competitors for smart glasses, announced on Wednesday it is launching Specs Inc. as a distinct subsidiary for its AR glasses. That move opens it up to potential minority investments.
Zoom out: Meta continues to face legal and regulatory scrutiny, including a landmark trial in Los Angeles over claims its platform deliberately addicts and harms young people. TikTok and Snap chose to settle, whereas Meta and YouTube will stand trial.
- While short-form video has significantly contributed to Meta's growing ad business, the company still competes for user attention and ad dollars with YouTube and TikTok — the latter of which just spun out its U.S. operations.
