Meta Platforms Inc. recently reported fourth-quarter earnings surpassing Wall Street expectations, delivering $8.88 per share on a staggering $59.89 billion in revenue. This result exceeded forecasts of $8.23 per share and $58.59 billion, marking a notable success for the social media giant.
In response, Rosenblatt Securities raised its price target for Meta to an impressive $1,144, the highest among analysts, indicating potential upside of 71% from current levels. The firm maintained a Buy rating, highlighting the strength of Meta’s advertising business as a central pillar of its growth.
Analyst Barton Crockett emphasized that Meta’s investments in artificial intelligence (AI) are already yielding positive results. The company’s capital expenditures are projected to soar from $39 billion in 2024 to $72 billion in 2025, with projections indicating spending could escalate up to $135 billion in 2026.
Initially, these ambitious spending plans concerned investors; shares fell by 7% after Zuckerberg’s October announcement. However, the sentiment shifted dramatically following the earnings report, leading to a 10% surge in share price.
AI Investments Driving Revenue Growth
Meta’s robust results can largely be attributed to its AI advancements in the advertising sector. CFO Susan Li revealed that the company has doubled its graphics processing units to enhance ad-ranking models in Q4. Moreover, new learning architectures have been implemented to maximize efficiency.
These enhancements resulted in a 3.5% increase in Facebook ad clicks and over 1% growth in conversion rates on Instagram, showcasing the tangible benefits of AI integration. Across all of Meta’s platforms, conversions rose by 3%, which translates to increased purchases and subscriptions for advertisers.
Last year, Meta achieved a remarkable 22% increase in revenue to reach $201 billion, and projections for Q1 2026 suggest that growth could reach as high as 34%, which is astounding for a company already generating nearly $60 billion quarterly.
Capacity Constraints and Future Plans
Despite its success, Meta expressed concerns about capacity constraints, stating that the demand for computing resources is outpacing supply. Li mentioned that the company anticipates expansion throughout 2026, but limitations may persist until infrastructure upgrades are implemented later this year.
Mark Zuckerberg underscored that the current capabilities of Meta’s AI systems still have much room for improvement compared to future developments. He noted that Meta’s recommendation systems are already driving significant growth, but there is ample potential waiting to be unlocked.
Innovatively, Meta is utilizing AI to automate ad creation, enabling businesses to generate video ads through AI tools. This initiative achieved a remarkable $10 billion revenue run rate in Q4.
Deutsche Bank analyst Benjamin Black views Meta’s AI-driven expenditures as a forward-looking trend, noting that enhanced computing power benefits the ad platform while providing a structural advantage to the company.
Rosenblatt pointed out the proactive measures Meta is taking to boost productivity across the board. With efficiency gains from engineers, Meta seems well-positioned to fund its AI investments while simultaneously generating solid free cash flow.
Currently, 44 Wall Street analysts have rated Meta with a consensus Strong Buy rating based on 39 Buy and 5 Hold ratings in the last three months. The average price target stands at $861.87, which signifies a 16.74% upside potential.
