This topic discusses the upcoming Q4 2025 Meta Platforms earnings. It will include our final assessment and decision before the earnings release. We will also summarize the results here. You can find our earnings preparation and full summary of the results in the Notion:
Earnings date: January 28, 2026
Time of Earnings release: 4:00 PM ET
Time of Analysts Call: 4:30 p.m. ET
I=8 Tinuiti Ads Benchmark report indicate Meta’s Q4 2025 revenue could grow by 19%-21%
Ad spent growth on Meta Platforms by Tinuiti advertisers decelerated to 9% in Q4 2025 from 14% in Q3 due to tough comparisons, ad impressions rose 17% y/y- the strongest growth in the last nine quarters while CPM fell 7% y/y (Q3 2025: -2%) as lower CPM inventories such as Reels continue to gain share.
Ad spend growth on Facebook decelerated to 3% y/y from 9% in Q3, ad impression rose 19% y/y- the fastest growth since Q3 2024 while CPM fell 13% y/y (Q3 2025: -6%).
Ad spend growth on Instagram decelerated to 15% y/y from 21% in Q3, ad impression rose 7% y/y (Q3 2025:+9% y/y) while CPM rose 7% y/y (Q3 2025: +11%).
Ad spend growth on TikTok rose 1% y/y (Q3 2025:-4%) as advertisers grew more confident on its future, ad impressions rose 8% y/y (Q3 2025: +23%) while CPM fell 6% y/y (Q3 2025: -22%).
Ad spend growth on Google search rose 13% y/y (Q3 2025: +10%), click through rate (CTR) accelerated to 13% y/y from 11% in Q3 while the drop in cost per click (CPC) was unchanged at -1%.
Assessment
Over the most recent eight quarters, Meta’s reported revenue growth has outperformed Tinuiti’s Meta ad spend growth by an average of 9.68% (Meta Tinuiti Report Analysis (Google Sheets)), highest outperformance being 12% . Based on the Tinuiti report, which has historically been a reliable indicator of Meta’s revenue growth, Meta’s Q4 2025 revenue could grow by 19%-21%. I arrived at this range by taking the Tinuiti ad spend growth rate and adding the average outperformance and highest outperformance. So, 9%+9.68% for low-point and 9%+12% for higher-point. Management is guiding y/y revenue growth in the range of 15.7%-21.9% (Q4 2025 Meta Platforms Earnings (Notion)), hence Tinuiti report signals revenue will be within the guidance range.
While Tinuiti has been indicating declining Meta CPM, Meta 10-Q reports have been showing CPM is stable (Meta Platforms Tinuiti Report Analysis (Google Sheets)). Therefore, I will take Tinuiti CPM numbers with a grain of salt.
I am cautiously bullish on Meta’s Q4 2025 earnings. While I expect solid results, I believe commentary on AI investments will carry the day. My expectations (Meta Valuation Model (Google Sheets)) are based on positive Tinuiti report, upgraded ad spend forecasts, continued gains from Meta’s AI-driven ad models, and Meta’s consistent guidance beats over the past seven quarters.
Here is a description of by bullish and bearish arguments:
Bullish arguments
Positive Tinuiti report: According to Tinuiti (forum post), which has been consistently reliable in predicting Meta’s revenue performance, ad spend on Meta Platforms by Tinuiti advertisers rose 9.7% y/y in Q4 2025. Based on this report, Meta’s Q4 revenue could grow by at least 19% y/y.
Upgraded ad spend projections by WPP and Madison and Wall: WPP raised their global ad spend growth rate forecast for 2025 to 8.8% in December from 6% in June (forum post). It also forecasts global ad spend to grow 7.1% in 2026, up from 6.1% predicted in June. Similarly, Madison & Wall recently increased its 2025 U.S. ad spend forecast to 11% from 3.6% previously (forum post). Additionally, Guideline’s U.S. digital standard media index (SMI), which tracks actual ad spend shows U.S. digital ad spend rose 10.8% y/y in November and 12.3% y/y in October (forum post).
Analysts ad checks were positive for Meta Platforms in Q4: RBC, Piper Sandler, UBS and Wedbush analysts have pointed out that their ad checks were positive for Meta Platforms in Q4 2025 (Q4 2025 Meta Platforms Earnings (Notion)).
Further upside from ad recommendation models: Meta Platforms continue to make progress in making its ad recommendation models (Andromeda, GEM, Lattice) more efficient. For instance, in Q3 2025 they piloted a new ad rankings model that’s more efficient in selecting relevant ads. Meta CFO Susan Li also pointed out that even small improvements in these models result in a meaningful increase in ad revenue (Q3 2025 Meta Platforms Earnings (Notion)).
Improving Reels Engagement: According to a recent Sensor Tower report, Instagram Reels and Facebook Reels are gaining share of time spent faster than TikTok or YouTube Shorts. Given that Reels are addictive, ads monetization should continue gaining from its usage (forum post).
Guidance beat in the last seven quarters: Meta Platforms has beaten management’s mid-point revenue guidance by an average of 4% in the most recent seven quarters. Similarly, it has beaten management’s upper-point revenue guidance by an average of 2% in the most recent four quarters (Meta Platforms Google Sheets).
Macro has been resilient so far: Based on expert commentaries, U.S. macro conditions have been resilient so far (forum post). This is positive to Meta given advertising spend is highly dependent on macro conditions.
FX tailwind: I expect Meta Platforms to benefit from further strengthening of the Euro against the dollar. Chinese Yuan also strengthened during the quarter. Management expects FX tailwind of 1% but my expectations is that it could even by up to 1.9% (Meta Platforms Google Sheets).
Some positive news on LLMs: There have been positive news recently on Meta’s LLMs. For instance, its CTO said the other day that Meta’s Superintelligence Lab has delivered the first models internally and they are “very good” (forum post). Small models released also received great reviews despite FAIR, the unit developing them seeing high executive turnover (Meta AI Releases (Notion)).
Metaverse budget cuts could signal start of another year of efficiency: Meta Platforms recently laid off 10% of Reality Labs jobs (1500 employees) and announced that it was shifting investments to wearables and AI glasses (forum post). While this may not lead to material cost-savings, it may signal that management is now focusing on high return on investments (ROI) projects.
Trades at a discount compared to peers: Meta shares currently trade at a P/E (next twelve months) of around 22, which is significantly lower than that of peers (e.g. Alphabet has Next twelve months P/E of 30.9 (Meta Platforms Google Sheets). This may signal that a number of risks mentioned below are now priced in.
Bearish arguments
Rising Capex: Zuckerberg’s recent announcement that they plan to build hundreds of gigawatts of data centers over time goes against my earlier assumption that their AI investment levels could start to come down from 2028. Also, based on their past AI announcements (Meta Platforms Key Capex Announcements (Notion)), their Capex needs seem to be growing every quarter, signaling that they could raise their projections further next week. Based on my earlier assumption that Capex will come down from 2028, my base intrinsic value estimate for Meta is $654 (Meta Platforms (Notion)). If Capex continue to rise instead, then the base intrinsic value will come down to $500-$600. Therefore, I view capex spend as the greatest risk currently impacting Meta Platforms shares.
AI execution risks: While we are starting to hear positive reports on the execution of MSL (as mentioned above), LLMs performance are rapidly evolving (i.e. Google and OpenAI continue to execute well) making it hard for Meta Platforms to catch up. Therefore, Meta’s upcoming LLMs should be really good for the company to convince the market.
Continued regulatory headwinds such as FTC: In my opinion, Meta shares didn’t react much after the company won the FTC trial over its acquisition of Instagram and Facebook, probably because the market expected the FTC to appeal the case (forum post). Therefore, the FTC case is likely to continue being a drag on Meta Platforms shares. Meta is also facing other regulatory headwinds such as countries starting to ban social media usage by teenagers (forum post) and youth-related class action lawsuits (forum post).
Rising reels ad loads could reduce engagement in future: I have noticed a rise in the number of ads in both Instagram and Facebook. Meta Platforms may be trying to extract as much revenue from Reels as possible to fund its AI investments (theory). If this trend continues, users may limit their usage of Instagram and Facebook as these ads can be boring.
Management guidance and analysts' estimates:
Management Guidance for Q4 (Revenue): $56.0-$59.0 billion (+15.7% to +21.9%)
Analysts’ Estimate for Q4 (Revenue): $58.4 billion (+20.6%) Analysts’ Estimate for Q4 (EPS): $8.18 (+2.0%)
Analysts’ Estimate for Q1 2026 (Revenue): $51.3 billion (+21.3%) Analysts’ Estimate for Q1 2026 (EPS): $6.36 (-1.0%)
Recommendation
Given that Meta Platforms is currently trading at $648, close to my base intrinsic value estimate of $654, and considering the risk that future cash flows could be further pressured by rising capex, I am recommending a Hold rating.
If the share price were to decline to around $500, I would upgrade the rating to Buy. Conversely, if management were to signal a significant increase in capex, I would consider recommending profit-taking.
I=10 Meta Platforms beats earnings estimates, provided strong guidance for Q1 revenue but guided Capex that is significantly above forecasts
Meta’s Q4 2025 revenue rose 23.8% y/y to $59.9 billion, above management’s upper guidance of $59 billion and analysts’ estimate of $58.3 billion while operating margin was 41% versus analysts estimate of 40%.
Meta guided Q1 2026 revenue in the range of $53.5-56.5 billion (+26.4-33.5% y/y) versus analysts’ estimate of $51.3 billion, 2026 total expenses in the range of $162-169 billion (analysts’ estimate: $150 billion) and Capex in the range of $115-135 billion (analysts’ estimate: $110 billion).
Family daily active people (DAP) rose 7% y/y to 3.58 billion, in line with analysts’ estimate, ad impressions grew 18% y/y (Q3 2025: +14%), while average price per ad increased 6% y/y (Q3 2025: +10%).
In the earnings call, Zuckerberg said they will release their latest AI models over the coming months.
“I expect our first models will be good, but more importantly, we’ll show the rapid trajectory that we’re on,” he said “And then, I expect us to steadily push the frontier over the course of the year, as we continue to release new models.”
CFO Susan Li pointed out that their ad algorithms continue to improve and they still see opportunities to make them more efficient.
Assessment
Meta’s Q4 2025 results were roughly in line with my estimates (revenue being above my upper point guidance). On the other hand, Q1 2026 revenue guidance was way above my upper point guidance of $52 billion.
I had recommended profit-taking if Capex came above my estimate of $120 billion. However, the strong revenue guidance and positive commentaries on their ad algorithms compensate the Capex headwind and reduces the downside risk for the share price.
The only major concerns I have are on the guidance and Zuckerberg’s commentary on their latest AI models. Their Q1 2026 guidance is quite extreme in my opinion and implies that Meta’s core business will need to develop perfectly during the quarter. Zuckerberg also seemed to imply that their latest AI models may not be very good. Given the company’s investment in AI talent, these AI models need to be very good to convince the market that Meta’s AI execution is back.
That said, I still think investments on their compute capacity remains a risk for Meta Platforms. As such, I am recommending a “hold” for Meta shares.
I=5 Analysts raised Meta’s price targets by roughly $20 on average to about $860, citing strong Q4 results and Q1 guidance that offset higher-than-expected Opex and Capex
I=6 Alphabet’s revenue was in line with estimates but the company guides massive increase in Capex
Google’s Q4 2025advertising revenue rose 13.6% y/y to $82.3 billion, above analysts’ estimate of $80.9 billion while total revenue rose 18% y/y to $113.8 billion, in line with analysts’ estimate.
Alphabet expects 2026 capital expenditures to be in the range of $175 billion to $185 billion, significantly above analysts’ estimate of $120 billion and up from $91.45 billion.
YouTube advertising revenue came in at $11.38 billion versus analysts estimate of $11.84 billion.
Alphabet finance chief Anat Ashkenazi said “advertising results were negatively affected from the lapping of the strong spend on U.S. election in the fourth quarter of 2024.”
EPS was $2.82 versus $2.63 estimated.
Alphabet shares fell as much as 7.5% in extended trading and are currently down around 1%.
