Shares in Meta Platforms rose on Thursday after the Facebook-parent reported fourth-quarter earnings that topped estimates. Wall Street continues to cheer higher investments in artificial intelligence as a long-term growth driver for Meta stock.
Also, Meta provided revenue guidance for the March quarter below views amid worries over currency exchange rates and a strong U.S. dollar.
Reported after the market close, Meta earnings rose 50% to $8.02 per share while revenue climbed 21% to $48.38 billion.
Meta's outlook for 2025 operating expenses came in much higher than expected. Further, Meta last week said it plans to hike 2025 capital spending to a range of $60 billion to $65 billion, topping Wall Street estimates of $51.4 billion.
AI Investments To Boost Revenue Growth?
"While the race to AGI is driving capex and operating expenses materially higher than expected, we believe Meta has earned the right to invest," said Truist Securities analyst Youssef Squali in a report.
Artificial general intelligence, also called AGI, is considered the highest form of AI, featuring humanlike or better cognitive capabilities.
China's DeepSeek has emerged as a new rival in building AI systems. Startup OpenAI also is pursuing AGI. On its earnings call with analysts, Meta indicated that it has no plans to pull back on capital spending in the wake of DeepSeek news.
Deutsche Bank analyst Benjamin Black holds an upbeat view.
"Meta delivered a strong Q4 print and a Q1 revenue outlook that, at the high-end, just hit street/ buyside expectations," he said in a report. "Importantly, as data center capacity comes online throughout 2025, Meta will have the ability to leverage their infrastructure to both train their latest foundational models and to support the core platform, driving near-term revenue growth durability."
Analysts expect more artificial-intelligence-driven advertising to provide a boost in 2025.
At Oppenheimer, analyst Jason Helfstein said in a report: "Investors must now believe that a 2025 investment year (20% low-end operating expense growth) will drive revenue 15% annually through 2027."
Meta Earnings Beat For December Quarter
At Jefferies, analyst Brent Thill said in a report: "While there is no explicit 2025 revenue guidance, management commentary suggests that investments in the core business should position Meta well for 'strong' revenue growth throughout 2025."
Bank of America analyst Justin Post maintains a buy rating. "While earnings momentum will stall in 2025, we think Meta sent a positive tone on an 'exciting product roadmap' for Meta AI, Llama, and Meta AI glasses without any real headwind warnings (outside of currency exchnge rates)," he said.
Digital advertising accounts for most of Meta's revenue.
"The company reported revenue ahead of its guidance and (estimates) with ad impressions up 6% in Q4 and average price per ad up 14%," said RBC Capital analyst Brad Erickson in a report.
Also, analysts projected the social media giant would post earnings of $6.76 per share on $46.97 billion in sales, according to FactSet.
On the stock market today, Meta stock rose 1.5% to close near 687. Heading into the Meta earnings report, shares had gained 16% in 2025 and 70% over the last 52 weeks.
Meta Stock Technical Rating
For the first quarter of 2025, Meta said it expects revenue in a range of $39.5 billion to $41.8 billion vs. consensus estimates of $41.7 billion.
For full-year 2025, Meta forecast expenses in a range of $114 billion to $119 billion vs. estimates of $111 billion.
"The company called out the main drivers of the (operating expenses) increase as infrastructure costs and employee compensation as the company adds more engineering talent," said RBC's Erickson.
The social media company's user base continues to show strong growth, said William Blair analyst Ralph Schackart, in a report.
"Threads has more than 320 million monthly active users, and is adding more than 1 million users per day," he said. "Similarly, WhatsApp now has more than 100 million monthly actives within the U.S."
He added: "Meta AI usage continues to grow. There are more than 700 million monthly active users of Meta AI, and the company is launching updates that will allow this service to deliver more relevant and personalized replies."
In addition, Meta stock owns a perfect 99 IBD Composite Rating, which combines five separate proprietary ratings into one rating and reflects strength across a number of technical and fundamental metrics.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
