Meta Earnings Preview: Big AI Bets and Reality Labs Drag on Outlook

Meta Platforms (META) stock rose about 12% over the past six days. The outperformance reflects optimism that Meta’s Q4 results, due after market today. The company is letting go of over 1,000 Reality Labs employees. That division has racked up about $73 billion in losses since 2021. Stock rally may also reflect these cuts.

Meta’s earnings arrive at a tricky time; investors want proof AI is improving operating leverage even as the company ramps up infrastructure spending. The issue is no longer whether revenue can grow, but how long margins can hold up as AI compute demand makes the business more capital-intensive.

Key Highlights

• BofA said Meta could beat Q4 estimates on ad momentum which is the firm’s main revenue driver and could ease AI-spending concerns. Updates on Threads ads and trials of premium subscriptions across apps could also help.
• Meta’s capex jumped to an estimated $70 billion last year (from $37 billion in 2024) and could top $100 billion in 2026. Analysts forecast Q4 revenue up 21% to $58.4 billion, but EPS rising just 2% to $8.21 as expenses climb. Meta is also pursuing creative financing including a JV with Blue Owl for a Louisiana data center, where Meta holds 20% and carries a four-year lease liability.
• Once dominated by ad sales (about 98% of revenue), Meta has poured into AI data centers and research, reshaping its finances. As it reports Q4 on Wednesday afternoon, investors will focus on its 2026 capital plans.
• This year Meta created Meta Compute to accelerate its data-center buildout. Meta Compute will partner with new president Dina Powell McCormick to finance the effort, a former banker with international ties. McCormick will work with sovereign-wealth funds for capital, Zuckerberg said.
• Zuckerberg says massive compute is needed to bring AI features to Facebook and Instagram, improve ad profitability, and support new researchers. He acknowledged the risk of wasting “a couple hundred billion” but argued the bigger risk is underinvesting; a view investors may not agree.

Analysts Expectation

• Bernstein SocGen Group reaffirmed an Outperform rating and set an $870 price target on Meta (META).
• KeyBanc trimmed its price target on Meta (META) to $835 from $875, while keeping an Overweight rating.
• Raymond James cut its price target on Meta (META) to $800 from $825, retaining a Strong Buy rating.

META Q4 2025 earnings after-market (4:05 pm ET) Wednesday January 28, 2026

Expected Move by Option Expiration

Options flow shows large net positive gamma at the 700 strike and a marginal net negative gamma at 600 for Jan 2026–Dec 2028 expiries. Option positions favor more call (bullish) than puts in the upcoming four expiries.

Technical Analysis Perspective

• META failed to clear the 800 level after a double-top near 790–795 (Aug–Sep 2025).
• The pattern is bearish, targeting the April 2024 uptrend line appearing around 546–530 at some point in future.
• Currently trading in a rectangle between 680 and 591 after a decline from the double top pattern.
• Rejection at 680 would keep the 680–591 range intact pre and post earnings.
• A decisive break above 680 would open a rally to 725–735.
• Analysts are very bullish — which may be optimistic, though META can still surprise.

Weekly Candlestick Chart

META Seasonality Chart:

Since 2012, META has seen January close with an 8.7% gain in 71% of years and February with a -0.3% decline in 38% of years.

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