Meta set to announce Q4 results as worries grow over AI investment

Meta’s Q4 Earnings Preview: AI Investments in Focus

Meta (META) will release its fourth quarter financial results after the market closes on Wednesday. Investors are closely monitoring the company’s ongoing investment in artificial intelligence data centers.

Since Meta’s third quarter earnings announcement in October, its share price has dropped over 12%, as shareholders express concerns about the company’s substantial capital expenditures.

The tech giant recently raised its 2025 capital spending forecast from a range of $66–$72 billion to $70–$72 billion, and anticipates even greater capital expenditure growth in 2026.

AI and Capital Spending

For the fourth quarter, Meta is projected to spend $21.9 billion, a significant increase from $14.4 billion in the same period last year. Analyst consensus from Bloomberg expects Meta to post earnings per share of $8.16 on revenue of $58.4 billion, surpassing last year’s $8.02 per share and $48.4 billion in revenue for Q4 2024.

Meta CEO Mark Zuckerberg introduces the Meta Ray-Ban Display smart glasses at company headquarters. REUTERS/Carlos Barria

Meta’s Reality Labs division is expected to generate $959 million in revenue for the quarter, but is also projected to report an operating loss of $5.9 billion.

Competition and AI Strategy

Meta is not the only tech giant investing heavily in AI infrastructure. Competitors such as Amazon, Google, and Microsoft are also allocating vast resources to their own data centers.

The company has also made significant moves in AI talent acquisition, including a $14.3 billion investment to acquire a 49% stake in Scale AI and appointing its CEO, Alexandr Wang, as Meta’s chief AI officer to lead its Superintelligence Labs.

However, Meta has encountered setbacks with its latest AI models, such as extended delays in launching the Llama 4 Behemoth.

Shifting AI Model Approach

Meta is considering making its next major AI model closed-source, moving away from its previous open-weights approach that allowed external developers to access and improve its models.

Restructuring and Market Position

The company has recently reduced its workforce in the metaverse division, redirecting some of the savings to its wearable technology projects, including AI-powered smart glasses.

These strategic shifts have led to speculation that Meta is struggling to maintain its lead in the AI sector, despite entering 2025 as a frontrunner. Google, with its Gemini 3 model, has now taken the lead, even outpacing OpenAI, the creator of ChatGPT.

This momentum has boosted Google’s stock by 66% over the past year. In comparison, Meta’s shares have risen only 4%, while Amazon’s have increased by just 1.8%.

Regulatory and Social Challenges

Meta is also facing mounting pressure to restrict social media access for users under 16. Australia has already implemented such a ban, and France is considering similar legislation.

Legal Developments and Further Reading

In the United States, the Federal Trade Commission recently announced it will appeal a court decision in its antitrust case against Meta. The case alleges that Meta acquired Instagram and WhatsApp to neutralize potential competition in the social networking market.

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