Meta Shares Surge to Record Peak Amid Bold AI Investment Strategy

Meta Platforms Inc. reached an unprecedented milestone on Friday, with its stock climbing to a record high of $725.40. This surge occurred despite notable volatility in the trading session, driven by a robust quarterly earnings report that was simultaneously tempered by a forward-looking corporate announcement. The social media giant revealed plans to commit up to $135 billion toward artificial intelligence infrastructure in 2026, a massive gamble with an uncertain payoff.

The company's fourth-quarter 2025 results showcased exceptional strength. Revenue soared by 24% to $59.9 billion, comfortably surpassing analyst expectations of $58.4 billion. Earnings per share also saw a significant uptick, rising 11% to $8.88, which again exceeded the consensus forecast range of $8.16 to $8.21.

This impressive performance was fueled almost entirely by Meta's advertising business. Ad revenue hit $58.1 billion for the quarter. A key driver was an 18% increase in total ad impressions, complemented by a 6% rise in the average price per ad. Company leadership attributes this success to AI-powered recommendation algorithms, which they claim boosted click-through rates for Facebook ads by 3.5% and improved conversion rates on Instagram by more than 1%.

A $135 Billion Question Mark

While current operations are thriving, investor focus has shifted to the future. Meta's guidance for 2026 outlines capital expenditures between $115 billion and $135 billion, centered around $125 billion. This midpoint figure represents an approximate 73% increase compared to the prior year, with funds directed toward data centers and AI infrastructure. Concurrently, management issued first-quarter 2026 revenue guidance of $53.5 billion to $56.5 billion, above the consensus estimate of $51.3 billion.

Should investors sell immediately? Or is it worth buying Meta?

The ambitious spending plans have elicited a mixed market response. After a jump of roughly 10% on January 29, the stock retreated by about 3% on Friday. Analyst opinions are divided: Jefferies raised its price target to $1,000, while Rosenblatt lifted its target to $1,144. In contrast, Pivotal Research modestly reduced its target from $930 to $910, though it maintained its "Buy" rating.

Cost discipline remains a priority in other segments. The Reality Labs division, which posted an operating loss of $6.02 billion in Q4, is set to reduce its workforce by 10%, resulting in the elimination of approximately 1,500 positions.

The Path Forward

Meta's colossal AI investment could secure a formidable strategic advantage, or it may become a costly venture whose returns materialize only years later. Forthcoming quarterly reports will indicate whether these substantial expenditures can further optimize the core advertising business and unlock new revenue streams. For now, the market is betting on continued growth: the new all-time high stands 65.69% above the 52-week low recorded in April 2025.