Social media titan Meta Platforms (NASDAQ: META), the parent company of Facebook and Instagram, released its Q4 and full-year 2024 earnings report on January 29. Despite widespread concerns surrounding high capital expenditures, the brainchild of Mark Zuckerberg more than delivered.
For the quarter ended December 31, the business reported earnings per share (EPS) of $8.02 and revenues of $48.4 billion. In terms of both of these metrics, Meta outperformed consensus estimates — analysts expected to see EPS of $6.75 and $46.9 billion in revenue.
Meta stock closed at a price of $676.49 on the day of the earnings call. In the after-hours trading session, prices reached a peak of $716 per Meta share. However, by press time on January 30, the price had receded even further — as Meta stock was changing hands at $692.91.
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This latest move to the upside has brought year-to-date (YTD) returns up to 18.60%. Furthermore, it appears inevitable that Meta stock will reach a new all-time high (ATH) price in short order.
Despite concerns in the sector about the impact that Chinese artificial intelligence (AI) competitor DeepSeek could have, particularly on mega-cap tech stocks like Meta, the markets appear to be optimistic — even when accounting for the company’s lower-than-expected revenue guidance.
Meta stock rises as Zuckerberg doubles down on infrastructure spending
Looking forward, Meta guided revenues of $39.5 billion to $41.8 billion — or $40.65 billion at the midpoint for the first quarter of 2025. In contrast, the midpoint Street estimate is $41.64 billion. The social media business did not provide full-year revenue guidance.
On top of that, the company said last week that it plans to increase capital spending in 2025 up to a range of $60 billion to $65 billion — a roughly 50% increase when compared to spending in 2024. Wall Street expected a more modest sum, closer to $51 billion — but Zuckerberg is confident that the risk of overbuilding presents a less significant danger than the risk of underbuilding.
To boot, the Meta chief executive officer (CEO) expressed doubts surrounding the narrative that DeepSeek has proven that high AI capex is unnecessary, having stated that:
“It’s possible that we’ll learn otherwise at some point, but I just think it’s way too early to call that, and at this point, I would bet that the ability to build out that kind of infrastructure is going to be a major advantage.”
Wall Street seems to share Zuckerberg’s sentiments — on January 30, Canaccord Genuity analyst Maria Ripps raised her price target on Meta stock to $825 from $730, opining that investors have become comfortable with Meta periodically leaning into investment cycles in order to support future growth.
Featured image via Shutterstock
