Meta's Bold AI Bet Fuels Stock Surge: Analysts Weigh In on Future Trajectory

Shares of Meta Platforms (NASDAQ: META) surged over 15% in after-hours trading Wednesday, propelled by quarterly results that smashed Wall Street expectations and a surprisingly bullish forecast. The rally marks a dramatic shift for a stock that had largely stagnated over the past year, reigniting the debate on whether the tech giant's aggressive pivot to artificial intelligence will deliver sustainable returns.

The company's fourth-quarter report showcased the enduring strength of its core digital advertising empire. Revenue climbed 24% year-over-year to $59.9 billion, handily exceeding the $58.6 billion consensus compiled by LSEG. Adjusted earnings per share of $8.88 also topped estimates. Driving this performance was a 24% jump in ad revenue to $58.1 billion, fueled by an 18% increase in ad impressions and a 6% rise in average ad price. User growth remained solid, with daily active people across its family of apps rising 7% to 3.58 billion.

However, the headline-grabbing figure was Meta's staggering capital expenditure commitment. Management announced plans to raise its 2026 capex range to $115-$135 billion, a massive leap from the $72.2 billion spent in 2025. The bulk of this investment is earmarked for AI infrastructure, including data centers and chip development. "We're playing to win in AI, and that requires building capacity years ahead of the curve," CEO Mark Zuckerberg stated in the earnings call.

This aggressive spending stands in stark contrast to the continued struggles of its Reality Labs division, home to its metaverse ambitions. The unit's revenue fell 12% to $955 million, while its operating loss widened to $6 billion. Meta cautioned that losses in this segment would peak in 2026.

Looking ahead, the company provided Q1 revenue guidance of $53.5-$56.5 billion, implying year-over-year growth of 26-34%. Analysts point to Meta's generative AI-powered ad tools and the nascent monetization of platforms like WhatsApp and Threads as near-term growth drivers. Trading at approximately 24 times forward earnings, Meta remains one of the more affordable mega-cap tech stocks in the AI arena.

Market Voices: A Split Verdict

David Chen, Portfolio Manager at Horizon Capital: "This isn't just a beat-and-raise story; it's a strategic declaration. Meta is effectively mortgaging its near-term margins to build an AI moat it believes will be unassailable. The ad business's resilience gives them the cash flow to fund this bet. At this valuation, the risk-reward is compelling for long-term investors."

Sarah Wilkinson, Tech Analyst at ClearView Research: "The guidance is impressive, but the capex number is breathtaking—and not in a wholly good way. They're doubling down on an AI arms race where competitive advantages can be fleeting. Investors should ask if this level of spending is an strategic imperative or just keeping up with the Joneses (Google and Microsoft). The Reality Labs losses remain a persistent drag."

Marcus Johnson, Independent Investor & Former Meta Engineer: "It's financial insanity. Throwing over a hundred billion dollars at 'AI' while your supposed 'next computing platform' bleeds $6 billion a year? This is a company trying to buy its way out of missing the last wave. The stock pop is short-term euphoria ignoring the long-term burn rate."

Priya Sharma, Chief Strategist at NextWave Advisors: "The user engagement and ad pricing power tell the real story. Meta's platforms are deeply entrenched. The AI investments are about enhancing that core engine, not just speculative futurism. The expansion of ads into WhatsApp is a virtually untapped $20+ billion opportunity alone. The momentum is justified."

Disclosure: Geoffrey Seiler has positions in Meta Platforms. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool recommends London Stock Exchange Group Plc.