Meta is poised to reveal its fourth-quarter earnings, with investors keenly focused on any indication that its significant pivot toward artificial intelligence will translate into tangible benefits throughout 2026. The social media giant has been aggressively restructuring its AI initiatives, a move that has drawn considerable attention, and at times, investor apprehension.
Analysts, according to LSEG, are forecasting earnings per share of $8.23 on revenue projections reaching $58.59 billion. A substantial portion of Meta’s 2025 was dedicated to this AI overhaul, highlighted by a reported $14.3 billion investment in Scale AI. This strategic infusion aimed to bring aboard Scale AI’s founder, Alexandr Wang, and key members of his team, who now spearhead Meta’s premier “TBD” unit. This division is tasked with the development of advanced AI models, established in the wake of the less-than-stellar reception of Meta’s Llama 4 model. Early indications suggest the company is actively testing a new frontier model, codenamed “Avocado,” slated for release in the first half of this year, as previously reported.
This intensified focus on AI necessitates a significant expansion of Meta’s data center infrastructure, a trend mirrored by competitors like OpenAI and Alphabet. In a move underscoring this commitment, Meta announced a substantial financial commitment to Corning, agreeing to pay up to $6 billion through 2030 for fiber-optic cable crucial to its AI data center build-out.
Despite investor concerns regarding the hefty capital expenditures associated with its AI ambitions, CEO Mark Zuckerberg has consistently framed these investments as essential given the rapid evolution of the AI landscape. He articulated in October that “Being able to make a significantly larger investment here is very likely to be a profitable thing over, over some period.” StreetAccount data suggests Meta’s capital expenditures related to its data center expansion are expected to be around $21.97 billion for the quarter, with online advertising sales projected at $56.98 billion. The company anticipates daily active users to reach 3.58 billion.
Beyond AI, investors will be closely monitoring updates regarding Meta’s Reality Labs division, the driving force behind its virtual and augmented reality initiatives and the envisioned metaverse. The company recently undertook a significant workforce reduction, laying off over 1,000 employees within Reality Labs, a move seen as a strategic reallocation of resources toward AI and associated wearable technologies, such as the Ray-Ban Meta smart glasses.
While Meta’s Chief Technology Officer, Andrew Bosworth, has indicated that VR development is not being entirely abandoned, the company’s substantial resource shift has reportedly caused concern among developers and raised fears of a slowdown in the VR sector. Analysts estimate Reality Labs will report an operating loss of $5.67 billion on $940.8 million in sales for the fourth quarter. Since late 2020, this division has accumulated over $70 billion in total operating losses.
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