Shares in Instagram, Facebook and WhatsApp owner Meta Platforms (NASDAQ: META) surged 7.5% in US after-hours trading after the tech giant delivered a strong fourth-quarter result and doubled down on its ambitious artificial intelligence (AI) spending plans.
For Australian investors, the move is highly relevant. Meta is a major holding in several ASX-listed ETFs, including the BetaShares NASDAQ 100 ETF (ASX: NDQ), VanEck Morningstar Wide Moat ETF (ASX: MOAT), ETFS FANG+ ETF (ASX: FANG), and the Global X Artificial Intelligence ETF (ASX: GXAI).
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What did Meta report?
Overall, Meta's numbers were impressive. Fourth-quarter revenue jumped 24% year on year to US$59.9 billion, while earnings per share rose 11% as costs climbed sharply. Advertising demand remained strong, daily active users across Meta's platforms increased, and management guided to around 30% revenue growth in the March quarter was a clear acceleration from full-year growth.
But the result wasn't really about last quarter's earnings. It was about spending.
Meta now expects capital expenditure of US$115 billion – US$135 billion in 2026, as it pours money into data centres, AI infrastructure, and what CEO Mark Zuckerberg has described as "personal superintelligence".
That's an extraordinary number and one that would normally make investors nervous, but the market welcomed it.
The reason is straightforward. Meta is funding this AI arms race from a position of strength. Its core advertising business is growing rapidly, generating enormous cash flows, and still delivering operating margins above 40%. Management has also indicated that, despite the surge in investment, 2026 operating income should be higher than 2025.
The bigger question is whether the spending will ultimately be worth it.
In the near term, AI investment is likely to boost investor sentiment around Meta as an "AI winner" whilst also potentially boosting revenue growth but weighing on earnings-per-share growth in 2026 as depreciation and infrastructure costs ramp up.
Investors, therefore, need to look beyond next year to assess the payoff.
The bull case is that current investments strengthen Meta's moat, and if Meta's AI push leads to new products, better ad performance, and sustained elevated growth beyond 2026, the current spending surge could prove highly profitable over time.
Foolish bottom line
Meta's rally is a vote of confidence that Zuckerberg and his team are striking the right balance between growth, profitability, and AI investments.
There was also a sense, going into the result, that Meta wasn't priced at an extreme valuation multiple relative to its growth, though execution risk remained. The sharp share price reaction suggests investors are increasingly confident that Meta is on the right track.
