Meta Platforms, Inc. engages in the development of products that enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality headsets, and wearables worldwide.
Although Meta is no longer held in the US Growth portfolio, it’s still a company that grabs attention every time it reports. This latest update was no exception.
Meta Platforms has delivered a powerful signal to markets, pairing stronger revenue momentum with an aggressive acceleration in artificial intelligence investment. The company now expects first-quarter 2026 revenue growth of roughly 26–34 per cent, supported by rising engagement across its core apps and faster growth in advertising impressions. A currency tailwind of about four percentage points is also helping lift top-line expectations.
This strength in advertising is crucial because it underwrites a dramatic step-up in spending. Meta has outlined capital expenditure of US$115–135 billion for 2026, well above prior levels. The investment is aimed at expanding computing capacity for both training and running advanced AI models. Management believes this “front-loading” of infrastructure will position the company for a sharp acceleration in overall revenue growth towards 30 per cent in 2026.
The strategy centres on a new generation of AI products built on Meta’s revamped large language model. These include personalised AI agents and digital assistants designed to work across Meta’s family of apps. Improved AI systems are already enhancing content recommendations and ad targeting, particularly in fast-growing areas such as Reels and click-to-message advertising. These formats have helped push recent revenue growth above 20 per cent, showing how AI improvements can translate into commercial gains.
Meta is also working to expand the reach of its Llama model beyond its own platforms. A reported 49 per cent stake in Scale AI is intended to improve access to high-quality training data and strengthen enterprise adoption. This move supports the creation of a broader ecosystem around Meta’s open-source approach, although the company faces pressure to prove returns on its heavy investment, especially compared with cloud peers that monetise AI directly through public cloud services.
Despite these ambitions, the financial impact of spending will be significant. Capital outlays are projected to represent 45–55 per cent of revenue, among the highest levels seen in large technology groups. Free cash flow is therefore likely to remain under pressure in the near term. Planned reductions in Reality Labs spending are modest, and that division continues to generate large operating losses, even as Meta shifts focus towards AI-enabled wearables such as its Ray-Ban smart glasses.
There are, however, signs Meta is seeking efficiency as it scales. Discussions around potentially using Google’s TPU chips could diversify supply and lower long-term computing costs. Over time, better hardware efficiency would help offset the burden of rising infrastructure needs as models become more complex.
Meta’s latest Llama 4 release highlights both progress and challenges. The new mixture-of-experts design is more demanding to run, and the absence of a dedicated reasoning model may limit broader developer uptake. Still, improvements in image and content creation could narrow the engagement gap with leading consumer AI tools and support Meta’s share in creative applications.
Overall, Meta is betting that stronger engagement, better advertising performance and new AI services will justify an unprecedented investment cycle. The core business is currently delivering the growth needed to fund that push, but sustained proof of commercial returns from AI will be key to maintaining investor confidence.
