Meta stock slides after earnings as higher 2026 AI spending overshadows strong ad growth

Meta stock swung sharply in after-hours trading Wednesday, January 28, 2026, after the company reported fourth-quarter and full-year 2025 results and laid out a much larger 2026 investment plan tied to artificial intelligence infrastructure. By about 6:25 p.m. ET, shares were $668.73, down 0.9% on the day, after trading as high as $742.66 and as low as $637.90.

The reaction reflects a familiar tug-of-war for investors: Meta’s ad engine is still growing quickly, but the company is asking the market to absorb a steep step-up in spending to build what it calls “superintelligence” capacity.

Earnings show strong demand in ads, but costs rose faster

Meta reported Q4 2025 revenue of $59.89 billion and full-year 2025 revenue of $200.97 billion, up 24% and 22% year over year, respectively. The company said ad impressions across its apps rose 18% in the quarter and average price per ad increased 6%, highlighting continued advertising strength.

But spending expanded even more quickly. Total costs and expenses were $35.15 billion in Q4 and $117.69 billion for the year, up 40% and 24% year over year, respectively. Capital expenditures, including principal payments on finance leases, reached $22.14 billion in Q4 and $72.22 billion for 2025.

Further specifics were not immediately available on how quickly incremental AI infrastructure will translate into measurable improvements in ad performance and user engagement.

The earnings call message: 2026 capex jumps again, with expenses climbing too

Meta’s earnings call was scheduled for 4:30 p.m. ET Wednesday, and the company’s outlook commentary set the tone for the stock move: a major increase in infrastructure investment is coming.

Meta said it expects:

• Q1 2026 revenue: $53.5–$56.5 billion

• Full-year 2026 total expenses: $162–$169 billion

• 2026 capital expenditures: $115–$135 billion

• 2026 tax rate: 13%–16%, absent tax landscape changes

Meta said most of the expense growth is expected to come from infrastructure (including third-party cloud spend, depreciation, and operating expenses), with employee compensation also rising as it invests in technical talent.

Key terms have not been disclosed publicly around the quarter-by-quarter cadence of that capex range, which can matter for free cash flow expectations and near-term margin sensitivity.

How Meta’s AI spending typically flows through results

Meta’s financial mechanism is straightforward but timing-sensitive. Advertising revenue is driven by the number of impressions served and the price advertisers pay. AI improvements can lift results by sharpening targeting and measurement (where allowed), improving relevance, and increasing conversion performance for advertisers—often showing up gradually through higher pricing power or improved inventory efficiency.

The cost side is where markets get jumpy. Building advanced AI capacity requires massive data-center spending, specialized chips, power and cooling, and ongoing operating costs. Those costs hit quickly, while the revenue payoff can take longer and may arrive unevenly. That’s why Meta’s 2026 capex range—far above 2025’s reported level—became the focal point for traders even as the ad business posted strong growth.

Regulatory headwinds remain in focus alongside the spending surge

Meta also flagged ongoing legal and regulatory risks. It noted it has aligned with European regulators on additional changes to its Less Personalized Ads offering, and said it continues to monitor regulatory pressure in the EU and U.S., including multiple U.S. trials scheduled this year that could result in a material loss.

Some specifics have not been publicly clarified, including how much revenue impact Meta expects from the newest adjustments to ad personalization options in Europe over 2026.

Who’s affected: advertisers, creators, and investors

The stakeholder impact spans more than shareholders watching the Meta stock price. Advertisers care most about whether AI investment continues to improve campaign performance and measurement stability, especially in a landscape shaped by privacy restrictions and regulatory changes. Creators and small businesses that rely on Meta’s platforms also feel the downstream effects of algorithm changes, ad load decisions, and product shifts intended to monetize engagement.

For investors, the question is whether Meta can keep delivering strong revenue growth while absorbing a substantial infrastructure buildout—without creating a multi-year margin drag that outweighs the long-term AI upside.

The next verifiable milestone is Meta’s next quarterly earnings release and conference call, when investors will look for early evidence that the 2026 spending ramp is translating into operating leverage—or at least clear signals that ad performance gains are keeping pace with the cost curve.