Is Meta's Huge Spending on AI Actually Paying Off?

The Wall Street Journal says that Meta "might be reaping some of the richest benefits from the AI boom so far."Meta's revenue grew 22% year over year in 2025 to $201 billion, and the company expects even bigger gains in the current quarter, potentially as high as 34%. That is huge growth for a company that brought in nearly $60 billion in the latest three-month period. And Zuckerberg signaled that Meta was just scratching the surface of AI's potential. "Our world-class recommendation systems are already driving meaningful growth across our apps and ads business. But we think that the current systems are primitive compared to what will be possible soon," he said on a call with investors and analysts... [Meta's Chief Financial Officer Susan] Li said the company doubled the number of graphics-processing units that it used to train its ad-ranking model in the fourth quarter and adopted a new learning architecture. Those actions led users to click on ads on Facebook 3.5% more often and to a gain of more than 1% in conversions, meaning purchases, subscriptions or leads, on Instagram, she said. Other AI-related improvements led to a 3% increase in conversions across its family of apps. On the ad-buying side, Meta has also been working toward using AI to automate ad creation for businesses that want to advertise their products or services on Facebook and Instagram. On the call, Li said the combined revenue run rate of video-generation tools hit $10 billion in the fourth quarter. In short, CNBC reported, Meta's stock price surged over 10% this week "after showing signs that AI investments are boosting the bottom line." Benjamin Black, an internet analyst at Deutsche Bank, explained the connection to the Wall Street Journal. "The more compute the ad platform gets, the far better it performs, and that's a real structural advantage that Meta has. If you can see that yesterday's spend is driving this month's growth, then as a good business person, you're going to continue to feed the beast." CNBC says now Meta "plans to spend between $115 billion and $135 billion on its AI build-out this year. That's nearly double what it spent in 2025."

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