Meta Platforms is set to report its fourth-quarter earnings this week, with investors closely watching how the company’s aggressive spending on artificial intelligence is affecting its financial performance and outlook. The results come at a time when Big Tech firms are under growing pressure to justify multi-billion-dollar investments in AI infrastructure amid an uncertain global economy.
The Facebook, Instagram and WhatsApp owner has made AI the centrepiece of its long-term strategy, committing tens of billions of dollars to data centres, advanced chips and research as it races to compete with rivals including Google, Microsoft and OpenAI. Chief executive Mark Zuckerberg has repeatedly described AI as Meta’s most important investment cycle in years, particularly in areas such as generative AI tools, ad targeting and content recommendation.
However, that spending has raised concerns on Wall Street. Analysts expect Meta to post strong advertising revenue growth for the quarter, supported by improvements in AI-driven ad efficiency and steady engagement across its platforms. At the same time, operating costs are forecast to rise sharply as capital expenditure linked to AI accelerates, potentially weighing on margins.
According to recent guidance, Meta plans to significantly increase capital expenditure in 2026 compared with the previous year, largely due to investments in AI servers and custom silicon. This has revived debate among investors about how quickly those investments will translate into meaningful revenue, especially as monetisation of generative AI products remains in its early stages.
Meta has already rolled out several AI features, including generative tools for advertisers, AI assistants embedded across its apps and open-source large language models under its Llama brand. The company argues these initiatives will strengthen its core advertising business over time, which remains its primary source of revenue, while also opening new opportunities in messaging, commerce and creator tools.
The earnings report is also expected to provide updates on Meta’s Reality Labs division, which houses its metaverse and virtual reality ambitions. While the unit continues to post losses, investors will be watching to see whether Meta maintains its current level of investment as AI increasingly dominates its strategic priorities.
Market reaction to the results is likely to hinge less on headline profit figures and more on forward guidance, particularly management’s commentary on AI-related spending, returns on investment and the balance between growth and cost discipline. With peers also reporting heavy AI outlays, Meta’s earnings are seen as an important signal of how sustainably Big Tech can fund the next phase of the AI boom.
