Meta is slated to report fourth-quarter earnings on Wednesday after the close of regular trading.
Here is what analysts polled by LSEG are expecting:
- Earnings per share: $6.77
- Revenue: $47.03 billion
Meta shares are up about 14% since Oct. 30, when the social networking giant reported third-quarter earnings and said it would raise the low end of its 2024 capital expenditures guidance from $37 billion to $38 billion. At the time, the company’s shares dipped slightly in after-hours trading, indicating some investor trepidation that Meta could be spending too much on artificial intelligence-related computing infrastructure without seeing many near-term returns.
CEO Mark Zuckerberg on Friday said Meta would invest between $60 billion and $65 billion in capital expenditures in 2025 as part of its AI strategy. Afterward, Meta shares hit a record, indicating that investors appear more tolerant of the company’s heavy spending as long as it is related to AI and not the still-nascent metaverse.
“They’ve been really adamant that there’s a lot to be excited about,” Raymond James managing director Josh Beck said about Meta’s AI spending. “They’re not going to be left behind the cycle.”
The high costs associated with AI have become more prescient after last week’s emergence of DeepSeek, a Chinese lab that claimed to have created a large language model that performs better and costs less to train than its American counterparts.
DeepSeek’s unverified claims will not have an immediate effect on Meta’s AI spend, said Ralph Schackart, an analyst at investment bank William Blair.
“There’s too much to gain or lose by not investing,” Schackart said.
Wall Street expects Meta to report fourth-quarter capital expenditures of $15.33 billion.
Investors want to know how TikTok’s removal from the Apple and Google app stores in the U.S. has affected Meta. The company has offered deals to creators to promote Instagram on other short-form video apps, including TikTok, Snapchat and YouTube, CNBC reported this week.
Meta last week said its Threads microblogging platform would begin testing ads in the U.S. and Japan. The ads show Meta is trying to capitalize on TikTok’s “volatility” in the eyes of brands seeking alternatives, Jasmine Enberg, principal analyst with eMarketer, said in an email.
The company’s relaxation of its content moderation policies, however, might concern advertisers, Enberg said.
“It may have been smarter to wait for a less politically charged social media environment,” Enberg said.