Meta's Big Bet on AI: Investing $135 Billion, Is Zuckerberg in 2026 Worth Trusting?

Written by: Frank, Maitong MSX

$135 billion, this is the amount Meta (META.M) plans to spend in 2026.

The double beat of Q4 2025 performance and Q1 2026 guidance has relieved many shareholders who have been anxious about being "left behind." However, at the same time, the capital expenditure (CapEx) for the entire year of 2026 is set to soar to $135 billion, nearly double that of last year, which raises concerns about whether this will be another reckless gamble.

Surprisingly, the market seems to have chosen to buy in, with Meta's stock price surging over 10% in after-hours trading and continuing to rise in night trading.

Meta Stock Price Data Source: Yahoo Finance

The answer lies in this earnings report: at least at this stage, it shows the market that AI investments are not just a future vision but are already improving the core cash cow—advertising business—so Wall Street is starting to bet on a narrative reversal for Meta and is willing to back this massive investment plan.

Ultimately, "daring to spend, daring to gamble" has always been the essence of Meta and Zuckerberg. This also means that winning could lead to a significant narrative reversal; losing, at least under the current financial structure, is unlikely to turn into an uncontrollable disaster.

1. Earnings Report Overview: Performance & Guidance "Double Beat"

From the results, this is an earnings report capable of changing market sentiment.

The core financial indicators for Q4 2025 have almost all exceeded expectations: revenue of $59.893 billion, a year-on-year increase of 24%, surpassing the market expectation of $58.6 billion; net profit of $22.768 billion, a year-on-year increase of 9%; diluted earnings per share (EPS) of $8.88, a year-on-year increase of 11%, exceeding the market expectation of $8.23.

It can be said that whether in terms of revenue growth resilience or profit release pace, Meta has delivered a solid and stable Q4 report card.

Looking at the full year, the growth logic remains valid: total revenue for 2025 is $200.966 billion, a year-on-year increase of 22%; operating profit is $83.276 billion, a year-on-year increase of 20%, with core indicators still maintaining double-digit expansion.

The only "contradictory" aspect is that the annual net profit recorded $60.458 billion, a year-on-year decrease of 3%, but this change is not due to a deterioration in the main business, but primarily due to a one-time tax factor—affected by the "Big and Beautiful Act," the company recognized about $16 billion in one-time non-cash income tax expenses.

Excluding this factor, the annual net profit and EPS would still achieve considerable growth, thus explaining the apparent contradiction between the annual data and the strong quarterly performance.

Source: Meta

Meanwhile, operational indicators also show a typical "volume and price rise" characteristic:

• Daily active users (DAU) of family apps reached 3.58 billion, a year-on-year increase of 7%, in line with market expectations;
• Ad impressions increased by 18% year-on-year; the average price per ad increased by 6% year-on-year;
• Average revenue per user (ARPU) was $16.73, a year-on-year increase of 16%;

This set of data points to one conclusion: Meta's advertising engine has not stalled; instead, it continues to evolve in efficiency and monetization capability.

Additionally, what truly stimulated market sentiment was not just the already realized better-than-expected performance but also the management's optimistic guidance for the future: Meta expects Q1 2026 revenue to reach $53.5–56.5 billion, corresponding to a year-on-year growth of 26%–34%, significantly higher than the market's previous expectation of about 21% growth. This pricing implies that management believes the high prosperity of Reels will continue, and the commercialization progress of Threads is better than the market's previous cautious expectations.

With a solid advertising foundation, this guidance also directly reinforces the market's confidence in the sustainability of AI-driven advertising efficiency improvements.

Reality Labs five-year loss details

Of course, it is worth mentioning that the "metaverse" remains Meta's bleeding edge, with its metaverse division Reality Labs recording an operating loss of $6.02 billion in Q4, a year-on-year increase of 21%, with revenue of $955 million, a year-on-year increase of 13%. Since the end of 2020, this division has accumulated an operating loss of nearly $80 billion.

However, unlike before, Reality Labs' role in this earnings report is no longer the core variable influencing the company's overall narrative and is gradually being marginalized.

2. Social Foundation Solid, AI Deepens "Moat"

At least in terms of its core business, AI has indeed begun to create real monetary value for Meta (META.M).

In a way, unlike Google (GOOGL.M) or Microsoft (MSFT.M), Meta is currently the most direct player whose "AI investment directly feeds back into the main cash flow," as validated by its earnings report.

This is first reflected in the systematic improvement of advertising efficiency, thanks to AI being directly embedded in the recommendation and advertising systems, allowing Meta's average price per ad to increase by 6% year-on-year in Q4, with ad impressions surging by 18%. Management has repeatedly emphasized that upgrades to AI recommendation algorithms and delivery systems have significantly improved ad conversion rates and delivery efficiency.

Among them, Instagram Reels has seen viewing time in the U.S. market increase by over 30% year-on-year, becoming the core engine driving advertising inventory and monetization capability.

Secondly, the acceleration of WhatsApp commercialization is underway, with Meta planning to fully introduce ads in WhatsApp Stories within this year, which is seen as the next potential billion-dollar revenue growth point for the company, and a key step for AI recommendations and advertising systems to expand into more traffic scenarios.

Overall, against the backdrop of ongoing external competition from TikTok and others, Meta's social foundation has not weakened; instead, it has further deepened its moat through the deep embedding of AI in recommendation and advertising systems.

Source: Meta

Looking back over the past year, Meta's actions in the AI direction have been nothing short of aggressive—from spending billions to acquire a stake in Scale AI, bringing in Alexandr Wang to lead the "Superintelligence Lab (MSL)," to continuously hiring high-paid talent, restructuring its AI organization, investing billions to acquire Manus, and launching Meta Compute, planning to build tens of GW-level computing and power infrastructure within this decade…

This series of actions has led many to recall a familiar script: aggressive investment, grand narratives, and long return cycles. In other words, we seem to see "Zuckerberg of the Metaverse era" again.

However, unlike the metaverse period, management has provided a clear bottom-line expectation this time, stating that even with significantly increased infrastructure investment, operating profit in 2026 will still be higher than in 2025, and the cost growth path of the massive investment in 2026 is highly transparent, mainly focused on computing power, depreciation, third-party cloud services, and high-end technical talent.

In short, within Meta's strategic framework, AI is not just a technology narrative betting on the future but a real tool that is continuously improving main cash flow. The logic is not complicated: when AI is deeply embedded in recommendation and advertising systems, even a slight marginal improvement, such as making 3.6 billion users stay a few more seconds each day or increasing ad conversion rates by 1%, will be rapidly amplified into considerable, repeatable cash flow increments given Meta's current traffic scale and advertising base.

It is precisely under this high-leverage structure that the efficiency improvements brought by AI are genuinely offsetting or even covering the annual capital expenditure of up to $135 billion. In other words, Wall Street is no longer afraid of Meta burning cash, partly because it has already seen the real monetary benefits brought by AI.

Interestingly, from a broader perspective, in the AI arms race in Silicon Valley, besides being busy exporting computing power, models, and tools, and selling "shovels and tools" to the world, another path is the Meta model—internalizing AI as the heart of its business system, directly amplifying existing traffic and monetization engines.

It is this model, which does not rely on selling new products externally but achieves returns by improving its own monetization efficiency, that makes Meta's AI investment path distinctly different from other large tech companies that focus on large models or cloud services for monetization logic. This is why the market has begun to reassess Meta's pricing foundation:

AI here is not a long-term story waiting to be realized but a real variable that can continuously and quantifiably feed back into the main cash flow through the advertising system.

This may also be the fundamental reason why the market is willing to reprice Meta.

3. A Violent Gamble, A War That Cannot Be Lost?

"Superintelligence" has become one of the most frequently mentioned keywords by Zuckerberg and Meta's management.

During the earnings call for this report, Zuckerberg did not hide his ambition: "I look forward to advancing personal superintelligence for users around the world," which has become a long-term strategy for Meta encompassing talent, computing power, and infrastructure.

First, looking at the capital expenditure figures, as mentioned above, Meta has embarked on a full-blown violent gamble, with total operating expenses for 2026 expected to reach $162–169 billion, a year-on-year increase of 37%–44%, significantly higher than the market buyers' previous expectation range of about $150–160 billion.

At the same time, Meta is also signaling "trade-off signals" to the market through actions. Just this month, media reports revealed that it plans to cut about 10% of Reality Labs employees, involving around 1,500 people, which means that metaverse-related businesses are being further compressed to free up resources for AI and core business.

More strategically significant is Meta's reclassification of computing power and infrastructure. On January 12, Zuckerberg personally posted that "a new top-level strategic project called Meta Compute has been launched," and according to disclosed information, Meta plans to invest at least $600 billion in data centers and related infrastructure in the U.S. by 2028.

However, Meta's Chief Financial Officer Susan Li later clarified this figure, stating that the investment is not solely for AI server procurement but covers the construction of domestic data centers in the U.S., computing power and power infrastructure, as well as the additional employees and supporting costs needed for U.S. business operations.

Objectively speaking, in terms of talent density, computing power scale, and infrastructure strength, Meta's investment in AI is already comparable to, or even exceeds, that of major competitors in certain dimensions.

Of course, this path is inherently a double-edged sword. If revenue growth, advertising efficiency, or new model progress cannot consistently outpace cost expansion, market tolerance will quickly decline, and both valuation and profit expectations may face backlash.

In other words, this is not an experiment that can be repeatedly tested; it is a strategic war that, once launched, is difficult to turn back.

In Conclusion

As early as a blog episode in September 2025, Zuckerberg candidly stated that if ultimately several hundred billion dollars were wasted, it would be very unfortunate. However, on the other hand, the risk of falling behind in the AI wave could be even greater for Meta.

"For Meta, the real risk is not whether the investment is too aggressive, but whether it will hesitate at critical moments," this statement, in today's context, can almost be seen as a footnote to all of Meta's strategic actions over the past year.

Of course, history will not be easily forgotten. In the last metaverse narrative, Zuckerberg also chose to bet early and push forward vigorously, but the final outcome did not meet the market's initial expectations.

The difference this time is that Meta holds the densest and most commercializable user traffic entry globally; and AI is directly reshaping the efficiency of connections between people and content, and between people and commerce in unprecedented ways.

As for whether $135 billion is a historic strategic leap or another costly lesson, the answer still needs time to reveal.