Meta's Profit Surge: AI Spending Set to Nearly Double

Meta Platforms reported a strong set of financial results for the final quarter and full year of 2025, buoyed by resurgent advertising demand and early benefits from AI intelligence across its platforms.

The Facebook and Instagram owner said revenue for the three months for the end of December rose 24% year-on-year to US$59.9bn, comfortable ahead of market expectations.

Net income increased 9% to US$22.8bn, while full-year revenue climbed 22% to US$201bn.

Mark Zuckerberg, Meta's Founder and CEO, said during the earnings call on 28 January: "We had a strong business performance in 2025. Our business also platformed very well thanks to record-breaking holiday demand and AI-driven performance gains."

The results helped lift Meta's share price by around 6-10% in extended trading following the announcement.

Ads remain the engine of growth

Advertising continues to underpin Meta's performance, generating US$58.1bn in revenue during the quarter, up 24% compared with a year earlier.

The company said growth was driven by an 18% rise in ad impressions and a 6% increase in the average price per advert.

Meta's platforms now reach vast numbers of users each day. Family daily active people averaged 3.58bn in December, a 7% annual increase, with Facebook, Instagram and WhatsApp each approaching or exceeding two billion daily users.

Despite the strong top-line growth, profitability came under some pressure as spending accelerated. Quarterly costs and expenses rose 40% to US$35.1bn, reducing the operating margin to 41%, compared with 48% a year earlier.

Susan Li, Meta's Chief Financial Officer, said the increase reflected deliberate investment choices: "Year-over-year growth was driven primarily by employee compensation expenses, legal expenses and infrastructure costs."

She added that higher compensation was linked to "the technical hires we've added this year, particularly AI talent".

Spending surge signals AI ambition 

Meta also set out plans for a dramatic escalation in investment during 2026, particularly in AI transformation. The company expects capital expenditure to range between US$115bn and US$135bn this year, almost double the US$72.2bn spent in 2025.

The earnings call outlined that the majority of that funding will be directed towards data centres, servers and networking equipment required to train and deploy increasingly sophisticated AI models.

Mark said: "We are now seeing a major AI acceleration. I expect 2026 to be a year where this wave accelerates even further."

Over the past three years, Meta has spent roughly US$140bn on AI-related projects as it seeks to compete with rivals such as Google and OpenAI.

"As we plan for the future, we will continue to invest very significantly in infrastructure to train leading models and deliver personal superintelligence to billions of people and businesses around the world," the CEO added.

Productivity gains reshaping the workforce

Meta said AI is not only reshaping its products but also the way the company operates internally. Susan highlighted substantial efficiency gains from AI-powered development tools, saying: "Since the beginning of 2025, we've seen a 30% increase in output per engineer."

Mark said these changes could have consequences for workforce structure: "We're starting to see projects that used to require big teams now be accomplished by a single very talented person."

The comments followed recent job cuts, including several hundred roles eliminated from Meta's Reality Labs division, which houses its virtual reality and metaverse-related efforts.

Financial position and outlook

Meta said it remains confident in its financial position. The company ended 2025 with US$81.6bn in cash and marketable securities and expects to fund its expansion largely through operating cash flow.

"Despite the meaningful step up in infrastructure investment," Susan said, "in 2026 we expect to deliver operating income that is above 2025 operating income."

The company's results underline the continued strength of its advertising business as it moves into a period of sharply higher investment in AI.