Meta raises 2026 AI spending outlook after Q4 earnings beat

Meta gave Wall Street two things it tends to reward: another strong advertising quarter and a clear plan for where the next wave of spending is going. Investors cheered the beat, then focused on the price tag for a 2026 AI buildout that could land north of $100 billion.

The company reported fourth quarter revenue of $59.89 billion, up 24% year over year, and said Family daily active people averaged 3.58 billion in December, a 7% increase. Ad impressions rose 18% and the average price per ad climbed 6%, a combination that kept the core ad engine growing even as competition for attention keeps tightening. 

Meta also set the tone for 2026. It forecast total expenses of $162 billion to $169 billion, up from $117.69 billion in 2025. Management said infrastructure costs will drive most of the increase, including third party cloud spend, higher depreciation, and higher operating costs for its data center footprint. Employee compensation is expected to be the next largest driver as the company hires more technical talent for priority areas tied to AI.

Capital spending is where the headline number landed. Meta expects 2026 capital expenditures, including principal payments on finance leases, in the range of $115 billion to $135 billion. The company tied the step up to investments for Meta Superintelligence Labs and its core business.

For the current quarter, Meta guided first quarter 2026 revenue to $53.5 billion to $56.5 billion and said foreign exchange could add about four percentage points of year-over-year growth at current rates.

A few other items are worth tracking. Reality Labs losses are expected to remain similar to 2025 levels, according to the outlook commentary. Meta also said it reached an agreement with the European Commission on additional changes to its Less Personalized Ads offering, with a rollout beginning this quarter, and it flagged ongoing regulatory and litigation headwinds in the EU and the US.

The earnings package included another reminder about the scale of the balance sheet. Meta ended 2025 with $81.59 billion in cash, cash equivalents and marketable securities, and generated $14.08 billion of free cash flow in Q4, giving it room to fund a heavier infrastructure cycle without leaning on external financing.