Meta Platforms Inc (META) Com USD0.000006

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Meta reported a 24% rise in fourth-quarter revenue to $59.9bn ($58.6bn expected ).

The number of people using at least one of Meta’s apps on a daily basis rose 7% to 3.58bn. Ad impressions rose 18%, while average price per ad rose 6%.

Operating income was up 6% to $24.7bn ($24.0bn expected), and margins fell from 48% to 41%.

Free cash flow rose 7% to $14.1bn, with capital expenditure (capex) rising to $22.1bn as AI investment continues. Net debt, including leases, was $2.3bn.

First-quarter 2026 revenue is expected in the range of $53.5–56.5bn. Full-year capex guidance has been set at $115-135bn (2025: $72.2bn )

The shares were up 7.5% in pre-market trading.

Our view

Meta delivered another strong quarter, but guidance was the real highlight, with first-quarter revenue at the top end, where Meta tends to land, roughly 10% above expectations. Core KPIs also impressed, with ad impressions up 18% and the already enormous user base continuing to grow.

Advertising is Meta’s core business, with consumer touchpoints across its array of services from Facebook and Instagram to newer entrants like Threads. For advertisers, that’s a treasure trove of potential customers, and AI is only making it more appealing. Consumers are getting a better product, advertisers are seeing more bang for their buck, and Meta’s been able to charge more as a result.

The other side of Meta’s story is the monumental investment in building next-generation products and services using AI. The numbers are quite astounding, with 2026 capex set to breeze past $100bn. Zuckerberg argues that he’d rather get out ahead of the curve in the pursuit of advanced AI than risk missing the boat.

It’s not just the infrastructure, though. Meta has also been on a hiring rampage to snap up the best AI minds to run what it aptly calls its Superintelligence lab. This is where the language models and new hardware products like wearables will come to life.

We see this as a slightly different equation than some of Meta’s tech peers, who are also investing heavily. This investment is focused entirely inwards, built to enhance engagement and advertiser performance rather than building data centres for others to rent, as the cloud giants do. It’s a high-risk, high-reward type of play that Mark Zuckerberg is well-renowned for making.

Meta can afford all that investment because of its mammoth cash flows. Costs will rise next year, but revenue growth at current rates should largely offset the impact on profits. Though that could mean some wobbles ahead if revenue slows.

The valuation has been under pressure since around October last year, as investors grew weary of the relentless capex ramp. We can understand some concern, but our belief is that markets are fully pricing in the ramping AI investment costs while giving almost no credit for the potential revenue upside.

We think that presents a good opportunity for Meta to outperform going forward. The core business is firing on all cylinders, and we see Meta continuing its dominance in the ad and social networking world, now aided by AI. That said, the aggressive spending plans put Meta toward the higher end of the risk curve compared to its tech peers.

Environmental, social and governance (ESG) risk

The technology sector is generally medium/low risk in terms of ESG, though some segments are more exposed, like Electronic Components (environmental risks) and data monetisers (social risks). Business ethics tend to be a material risk within the tech sector, ranging from anti-competitive practices to intellectual property rights. Other key risks include labour relations, data privacy, product governance and resource use.

According to Sustainalytics, Meta’s overall management of material ESG issues is average.

Meta's structure limits the power of minority shareholders in company decisions. While the company’s privacy committee oversees its compliance with a significant 2019 settlement, Meta still faces ongoing lawsuits and fines for privacy issues, pointing to management gaps.

We would specifically flag a recent EU decision that certain pricing models are not compliant with regulations and, while Meta is appealing, modifications to comply could impact the user experience in Europe.

The author holds shares in Meta.

This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment.

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