The Meta Platforms (NASDAQ:META) share price is rising in extended trading after the company’s Q4 results on Wednesday (28 January). The question is: why?
After its Q3 update, the stock fell as the firm’s huge artificial intelligence (AI) spending made investors nervous. That looks set to continue, but the response has been very different this time.
Q4 earnings
Meta’s results for the fourth quarter of 2025 were very strong. Revenues were up by 24% and earnings per share grew 11% – but these aren’t the numbers investors were really waiting for.
The market’s focus recently has been the company’s plans to keep investing in AI data centres. And while capital expenditures were up 49% in Q4, there’s more to come in 2026.
Meta announced plans to increase spending from $72bn to somewhere between $115bn and $135bn. That’s more than double the company’s net income from 2025.
When the firm announced a $5bn increase in capital expenditures in Q3, the stock fell 11%. But investors seem to be much more positive this time – and I have a theory about why.
What’s changed?
I think the big difference is a change in tone from CEO Mark Zuckerberg. That might not sound like much, but it might well be at the core of how investors are viewing Meta shares at the moment.
In Q3, Zuckerberg spoke about spending to avoid the risk of being underinvested in AI. But the idea that the company was essentially spending because it had no choice didn’t go over well.
This time, the CEO was much more positive about the purpose of the AI investment. The emphasis was more on the kind of products Meta hopes to launch, rather than losing ground.
From an investment perspective, that can make a big difference. It’s one thing for the firm to spend $70bn just to avoid being left behind, but another for it to have $130bn worth of opportunities.
What should investors think?
Meta is encouraging investors to see its higher spending as an investment opportunity, rather than a necessary cost. But I’m not entirely sure I’m buying it and that makes me wary.
The firm has also been borrowing to finance its AI spending and this also changes the equation. Getting a bad return on cash is one thing, but taking on debt raises the stakes for investors.
Importantly though, the firm expects operating income to grow in 2026. Given the increase in already huge spending commitments, that’s both impressive and reassuring.
This – along with some very impressive results in Q4 – highlights the strength of Meta’s core advertising business. But that’s something investors probably didn’t need reminding of.
AI risks and rewards
Meta is increasing its capital expenditures, but the stock market is taking the news well – certainly compared to the response at the end of Q3. And I think there are two main reasons for this.
In my view, the more positive commentary provided by Mark Zuckerberg – as an opportunity, rather than a threat – is one reason. The other is the strong operating income guidance for 2026.
Both of these are encouraging, but I think a rising share price ought to make investors cautious. The stock is definitely one to keep an eye on, but that’s about as far as I’m willing to go right now.
