In a notable endorsement, Nvidia CEO Jensen Huang has identified Meta Platforms as the current leader in monetizing artificial intelligence technologies. Speaking to CNBC, Huang emphasized that "nobody uses AI better than Meta," highlighting the company's effective deployment of AI to drive profitability. This praise arrives amid a broader market focus on the substantial capital expenditures being undertaken by major technology firms to build out AI infrastructure, with investor concerns mounting over the timeline for returns on these massive investments.
Meta's Financial Performance and Spending Outlook
Meta recently provided its financial results for the fourth quarter, reporting a significant 24% year-over-year increase in revenue, which reached $59.9 billion. Earnings per share for the period stood at $8.88. CEO Mark Zuckerberg pointed to a strong business performance throughout 2025 as a key driver. However, the company also outlined an ambitious capital expenditure forecast for 2026, projecting spending between $115 billion and $135 billion. These funds are primarily earmarked for data centers and other critical infrastructure to support its expanding AI initiatives.
Advertising and AI-Driven Metrics
The company's advertising business showed robust health, with ad revenue climbing to $58.14 billion in Q4. Meta attributed improvements in its advertising performance to upgrades in AI-powered ranking models. Specifically, the implementation of more advanced "sequence learning" systems, which analyze extended user behavior patterns, led to a 3.5% increase in Facebook ad clicks and a rise of just over 1% in Instagram conversions during the quarter. Furthermore, Meta disclosed that its AI video generation tools have achieved a quarterly revenue run-rate of $10 billion, while a new incremental attribution model for measuring ad impact is now operating at a multi-billion-dollar annual run-rate.
Despite these positive indicators, Meta's operating margin has contracted, falling to 41% from 48% the prior year. The company cited rising costs related to its AI investments and noted that increasing legal and regulatory challenges in both the European Union and the United States could significantly affect future performance. Analysts, such as those at The Motley Fool, have warned that profitability is facing pressure as spending escalates.
Broader Market Context and Investor Sentiment
The technology sector's aggressive spending on AI is a double-edged sword, generating both optimism about future capabilities and anxiety over current costs. According to a report by the Financial Times, leading tech companies are preparing to invest approximately $660 billion into AI by 2026, a sum with the potential to influence global markets. Investor patience is being tested, however. Andrew Wells, Chief Investment Officer at SanJac Alpha, commented to Reuters that "the AI build-out trade... got too pricey," reflecting a sentiment that valuations for companies in the expansion phase may have run ahead of near-term fundamentals.
Meta's strategic moves extend beyond internal development. The company's $14 billion acquisition of a 49% stake in Scale AI, a deal reported by Reuters last year, brought founder Alexandr Wang into Meta's orbit and underscored its commitment to bolstering its AI capabilities through partnerships and acquisitions.
Long-Term Prospects and Valuation
Some market observers remain bullish on Meta's long-term trajectory. A recent Nasdaq.com investor column suggested the company could potentially join the $4 trillion valuation club by 2032, though achieving this would require a compound annual growth rate of roughly 14%. As of February 7, Meta's market capitalization was approximately $1.67 trillion. For context, Nvidia reached a $4 trillion valuation in July 2025, with Alphabet following suit in January 2026.
The overarching debate centers on when the significant AI investments will translate into sustained, broad profitability. As 24/7 Wall St. noted, Huang's comments serve as a valuable marker for investors grappling with distinguishing between the AI "spend" phase and the "payoff" phase. Meta's shift from older CPU-based systems to more advanced "agentic" generative AI, which powers planning and action capabilities across its services, is seen as a critical step in this journey. Nevertheless, should economic conditions weaken and advertising budgets contract, the scrutiny on AI's return on investment is likely to intensify considerably.
