Published: Thursday, January 29, 2026 · 12:43 AM | Updated: Thursday, January 29, 2026 · 12:43 AM
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Meta Platform crushed its fourth quarter, beating on the top and bottom lines. But it was the social media giant’s guidance that is giving the stock an after-hours lift — and offsetting worries about its sky-high spending on artificial intelligence Revenue in the fourth quarter ending Dec. 31 rose 23.8% year over year to $59.9 billion, topping the consensus estimate of $58.59 billion, according to market data service LSEG. Adjusted earnings per share came in at $8.88, ahead of the $8.23 expected, according to LSEG. Bottom line Meta Platforms reported very strong results: sales outpaced estimates, better-than-expected operating margins drove an earnings beat, and cash flow performance exceeded expectations. But it was Meta’s revenue guide for the current quarter and implied full-year forecast that helped push the stock up 8%. On a sequential basis, revenue grew across all key regions, as the company’s family daily active people (DAP) increased to 3.58 billion, and its average revenue per person (ARPP) increased to $16.56, both ahead of expectations. The only black eye on the report was a loss in Reality Labs, but given management’s recent efforts to reduce spending in the division, investors are looking past it. Despite the positive results, Meta’s shares initially sold off on the release. If you’ve been following the recent Meta story, analysts are more focused on the guidance — specifically on expenses — than the quarterly results. Both management’s total expense forecast and capital expenditures forecast came in well ahead of expectations, even at the low end. Why did the stock stage a comeback in after-hours trading? It’s because of Meta’s current-quarter revenue guidance and another key line in the release about operating income. The focus here is on total expenses — such as spending on salaries, rent and marketing — as they affect the income statement . Capital expenditures, which include construction of new data centers and the servers inside them, are important because they represent a use of cash, and a significant one in Meta’s case. However, it’s important to remember that capital expenditures only affect income through asset depreciation, which occurs in future quarters. The team forecasted total expenses — all expenses recorded between sales and operating income on an income statement — to be about $12 billion to $19 billion above analyst expectations. META 1Y mountain Meta 1-year return For 2026, the Street was looking for operating income to be about $2.6 billion above 2025. Obviously, if management is telling you that total expenses are going to be, call it $15.5 billion (the midpoint) above expectations, and analysts only expected a $2.6 billion increase after accounting for expenses, the implication would be that operating income is going to decline year-over-year. That is, of course, unless the revenue estimate is wrong. Now back to the current quarter guidance. Management guided that the current-quarter revenue would be about $3.6 billion above estimates. It’s also important to note that, due to seasonality, the first quarter is generally Meta’s lowest-revenue quarter of the year, or close to it. So, full-year expenses are expected to be $15.5 billion above expectations (midpoint), but the weakest quarter of the year is expected to generate about $3.6 billion more in revenue than expected. Now for the kicker: On the release, management stated, “Despite the meaningful step up in infrastructure investment, in 2026 we expect to deliver operating income that is above 2025 operating income.” In other words, Meta has signaled that 2026 operating income will exceed the $83.28 billion generated in 2025. However, for the sake of conservatism, let’s use that as our base case. Assuming no operating income growth, based on the total expense guidance, Meta would need to generate revenue between $245.3 billion and $252.3 billion. That compares with a Street estimate for 2026 revenue of $236.1 billion. As a result, the expense guidance was materially above expectations, something we would normally expect to trigger some stock selling, but the implied revenue forecast put the bulls in charge after hours. Of course, it doesn’t hurt that the stock never fully recovered from its third-quarter earnings sell-off. Given the results, the current-quarter and full-year revenue guidance, plus the fact that the stock is still well off its highs despite Wednesday evening’s pop, we reiterate our 1 rating and $825 price target. Guidance Meta projected current-quarter revenue to come in well ahead of expectations, between $53.5 billion and $56.5 billion, materially above the $51.4 billion consensus Street estimate, according to LSEG. For the full year 2026, the team expects total expenses to be between $162 billion and $169 billion, significantly above the $150 billion analyst estimate. Capital expenditures for the full year are expected to be between $115 billion and $135 billions, well above the $110.7 billion expected, according to FactSet. (Jim Cramer’s Charitable Trust is long META. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has discussed a stock on CNBC, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
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