Meta Platforms Inc. is set to announce its fourth-quarter earnings on Wednesday after the close of regular trading. Investors are eagerly awaiting the results, particularly in light of the company's recent focus on artificial intelligence (AI) investments. The tech giant has garnered attention for its significant spending in AI, with shares reaching record highs following this strategic emphasis.
Meta's substantial AI investments have drawn interest, especially as the global landscape evolves with competitors like DeepSeek. The Chinese lab claims to have developed a large language model that not only performs better but also costs less to train than those by American firms. This development underscores the increasing importance of cost-effective AI solutions, prompting Meta to take bold steps in the field.
The company's financial outlook remains robust, with Wall Street analysts predicting fourth-quarter capital expenditures of $15.33 billion. CEO Mark Zuckerberg has reinforced Meta's commitment to AI, planning to allocate between $60 billion and $65 billion for capital expenditures by 2025. This strategy aims to solidify Meta's position in the rapidly advancing AI sector.
In addition to its AI focus, Meta is exploring new revenue streams. The Threads microblogging platform will begin testing advertisements in the U.S. and Japan, reflecting Meta's efforts to diversify its digital advertising reach. Furthermore, the company is seizing opportunities amid TikTok's current challenges, offering deals to creators to enhance Instagram’s appeal across platforms like Snapchat and YouTube.
However, Meta's approach is not without potential risks. The relaxation of content moderation policies may raise concerns among advertisers wary of brand safety.
"It may have been smarter to wait for a less politically charged social media environment," said Jasmine Enberg, principal analyst with eMarketer.
Meta's financial performance has shown resilience, with shares increasing approximately 14% since its third-quarter earnings report on October 30. Despite a slight dip in after-hours trading when third-quarter results were announced, investor confidence remains strong.
"They've been really adamant that there's a lot to be excited about," stated Josh Beck, managing director at Raymond James.
Market expectations for Meta's fourth-quarter earnings per share stand at $6.77, with revenue anticipated to reach $47.03 billion. Investors are particularly interested in how TikTok's removal from major app stores in the U.S. has impacted Meta's market dynamics.