ii view: Meta predicts highest sales growth in years

Meta CEO Mark Zuckerberg pictured in Las Vegas, Nevada. Photo: Chris Unger/Zuffa LLC.

Fourth-quarter results to 31 December

• Revenue up 24% to $59.9 billion
• Earnings up 11% to $8.88 per share
• Cash and equivalents held of $81.6 billion, up from $44.45 billion in Q3

Guidance:

• Expects first-quarter revenue of $53.5-56.5 billion
• Expects full-year 2026 capital expenditure of $115-135 billion, up from $72.2 billion in 2025

Chief Executive Mark Zuckerberg said:

"We had strong business performance in 2025.

"I'm looking forward to advancing personal superintelligence for people around the world in 2026."

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ii round-up:

Facebook and WhatsApp owner Meta Platforms Inc Class A (NASDAQ:META) predicted the highest growth in sales for more than four years, aided by AI assistance in targeting ads. 

Sales in the first quarter to late March are forecast to rise to between $53.5 billion and $56.5 billion, versus $42.3 billion in early 2025. The Mark Zuckerberg headed Meta invested $72.2 billion in group infrastructure last year and plans to invest up to $135 billion in 2026.

Shares in the Nasdaq 100 company rose 7% in post results trading having come into these latest numbers up 13% in 2025. The Nasdaq 100 index rose 20% last year. Alphabet Inc Class A (NASDAQ:GOOGL), the owner of Google and similarly exposed to ad sales, soared 65% in 2025.

Meta operates across the two businesses of Apps including Facebook, Instagram, Messenger and WhatsApp, as well as virtual reality gaming and metaverse interests in its Reality Labs division. 

Revenue in the final quarter of 2025 rose 24% to $59.9 billion, fuelling 11% upside in adjusted earnings to $8.88 per share. Wall Street had expected outcomes of $58.6 billion and $8.23 per share respectively. 

Ad impressions made over the quarter across Meta’s apps rose 5%, with sufficient corporate demand to drive a 10% increase in the average price paid year-over-year.

Ad-related revenues for 2025 totalled $196.2 billion, up from 2024’s $160.6 billion. Sales in the Reality Labs business of $2.2 billion was up on 2024’s $2.15 billion. 

Broker Morgan Stanley retained its ‘overweight’ stance on Meta shares post the news, raising its estimate of value fair to $825 from $750 per share.

ii view:

Founded in 2004 by Mark Zuckerberg, Meta’s headcount rose 6% from a year ago to 78,865. Geographically, US and Canadian customers accounted for its biggest slug of ad revenues during this latest quarter at 44%. That was followed by Europe at 24%, Asia-Pacific at 19% and the rest of the world the balance of 13%. 

For investors, increasing investments made by the company in AI are not guaranteed to generate higher profits in the future. A move by Australia to impose age restrictions on the use of social media could be followed by other countries. A forecast price/earnings (PE) ratio above the three-year average may suggest the shares are not obviously cheap, while governments are concerned about possible misinformation spread by social media.

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More favourably, Meta is pushing the use of its own AI tech to help tailor and target advertising to its customers. Meta’s current strong positioning in 3D, or Virtual Reality gaming and glass wear, could be significantly improved given likely enhancements from AI. Active use of its apps continues to grow, while the company also now pays a modest dividend. 

Positives

• Daily active users increasing
• Moves made to reduce misinformation

Negatives

• Uncertain economic outlook
• A series of scandals have previously impacted

The average rating of stock market analysts:

Buy