Meta Platform Earnings (Dec '25 qtr)

January 29, 2026

As with most quarters with Meta, this one had a lot to love, and lot to hate.  Revenues were strong, and revenue guidance was well ahead of street estimates!  That’s good news.  On the other hand, expenses and capex are growing even faster.  So that’s not as good.   Last quarter, revenue grew 24%, but expenses grew 40%.  So operating profit grew only 6%.

Here’s a question that you probably have. What are they spending all that money on?  It’s not like they have a cloud business or even an AI model that everyone uses, right?

Well, actually, they have both.  They’re just different types.  Their cloud business is just for themselves.  They don’t want to be reliant on Micosoft or Amazon for online computing.  So they are building their own data center platform just for themselves.

And as for their AI model, well, you’ve almost certainly used (or been affected by) their AI model without noticing it.  Well, if you use Facebook, Instagram, or WhatsApp, that is.  The main growth engine for their business is using AI to better serve you ads in.   Also, if you go into one of those apps, you can see “Meta AI” ready and willing to help you in whatever what you need.  

What’s the punchline?  Well revenue growth continues to accelerate.  Gross margins continue to improve.  But the opex and capex keep growing even faster!  So operating profit and free cash flow keep dropping.

Meta is one of the least talked about drivers of the current AI boom.  They’re spending like crazy - $21 billion last quarter alone.  That’s driving increased demand all along the computing industry.

If nothing else, AI demand is still strong.