Meta Stock Giving Mixed Signals Ahead of Earnings – What To Expect

Meta’s stock price (NASDAQ:META) has been struggling to find real momentum of late, sitting more than 15% off highs, even after having bounced 10% off the lows of last week. The company heads into today’s earnings in a bit of a precarious position then, 0.66% lower on a 12 month basis, lagging the broader market.

The quarter can be seen as a test on whether Meta can sustain advertising momentum while convincing investors that its accelerating AI infrastructure spend will generate adequate returns.

Wall St estimates for the quarter of $6.70 EPS and $49.39B revenue, both above the company’s prior Q4 guidance midpoint of $49.0B, create a setup where execution must exceed rather than merely meet expectations to justify the stock’s 29.8x trailing multiple.

Meta’s modern corporate campus illuminated at night, reflecting the company’s focus on technology and innovation as it prepares to report Q4 2025 earnings.

The stock has moved out of the technical bear market territory following Q3 2025 results, when management signaled 2026 capital expenditures could exceed $100 billion. That guidance reset the market’s tolerance for spending opacity, shifting the debate from “AI is enhancing ad monetization” to “how much must Meta spend to sustain that enhancement.”

The forward valuation framework now hinges less on Q4’s backward-looking scorecard and more on whether 2026 guidance implies structurally lower free cash flow conversion.

Meta has already raised 2025 capex to $70B-$72B and warned that 2026 dollar growth will be “notably larger,” so any additional step-up without clearer ROI timing could dominate the stock reaction even if holiday-quarter advertising revenue beats consensus.

Consensus Estimates

Consensus revenue of $49.39B sits 0.8% above Meta’s prior Q4 guidance midpoint of $49.0B, a narrow margin that reflects the Street’s assumption of continued advertising strength but limited willingness to extrapolate upside given spending concerns. The estimate range spans $4.46B, indicating material disagreement among analysts about how holiday-season ad demand translated into revenue.

EPS consensus has risen $0.04 over the past 30 days, driven by 11 upward revisions and zero downgrades, suggesting recent ad checks supported higher profitability assumptions. The critical comparison point is whether revenue lands meaningfully above $49.39B, as anything closer to the guided midpoint would constitute a “meet” rather than a “beat” in a market that has priced in strong execution.

Meta’s corporate branding reflects the company’s evolution from Facebook to a broader technology platform focused on AI and the metaverse.

The YoY revenue growth of 21.7% would mark a deceleration from Q3 2025’s 26% growth but an acceleration from Q4 2024’s implied 20% growth, positioning the quarter as a test of whether Meta can sustain mid-20s growth rates while absorbing higher infrastructure costs. Operating margin consensus near 40.1% assumes Meta can hold profitability flat year-over-year despite the expense and capex step-ups signaled in prior guidance, creating asymmetric risk if either revenue mix or cost structure disappoints.

Management Guidance and Commentary

“We’re going to continue investing significantly in infrastructure, and I expect our capital expenditures for 2025 to be in the range of $70 billion to $72 billion. Looking ahead to 2026, we expect capital expenditures to increase notably from 2025 levels.”

Meta’s Q3 2025 guidance established a revenue range of $56B-$59B for Q4, with a midpoint of $57.5B. Current consensus of $58.41B (from recent news sources) sits 1.6% above that midpoint, implying the Street expects execution toward the upper end of the range. The company also raised full-year 2025 expense guidance to $116B-$118B and capex to $70B-$72B, both increases from prior outlooks, while explicitly warning that 2026 capex dollar growth would be “notably larger.” That language introduced open-ended spending risk without quantifying the magnitude, contributing to the stock’s 7.7% after-hours decline following the Q3 report.

“The annual revenue run rate for its end-to-end AI-powered ad tools has now surpassed $60 billion.”

Management has framed AI infrastructure spending as essential to sustaining advertising monetization improvements, pointing to the $60 billion annual run rate for AI-enhanced ad tools as evidence of near-term returns. The tension is whether that monetization trajectory can absorb capex that may exceed $100 billion in 2026, a figure that would represent roughly 40% of 2025 revenue and compress free cash flow conversion meaningfully below historical norms. The January 28 report will determine whether Meta provides a bounded range for 2026 capex or reiterates the “notably larger” framing without additional constraint.

Analyst Price Targets & Ratings

Wall Street maintains a bullish stance on Meta, with 87% of analysts rating shares a Buy or Strong Buy. The consensus target of $832.78 implies 23.9% upside from current levels, though this represents a meaningful reduction from targets that exceeded $900 earlier in 2025. The target compression reflects analyst acknowledgment that elevated capex will pressure free cash flow conversion, even as revenue growth remains robust.

Sector & Peer Comparison

Meta trades at a 22.7x forward P/E, a 13% premium to Alphabet’s 20.1x multiple but a 19% discount to Amazon’s 28.2x and a 30% discount to Netflix’s 32.5x. The relative positioning reflects investor acknowledgment of Meta’s superior profitability (30.9% net margin vs. Alphabet’s 27.5%) but skepticism about whether AI spending will compress margins or free cash flow in 2026.

Earnings Track Record

Meta has beaten EPS estimates in 14 of the last 18 quarters, a 77.8% success rate with an average surprise of +7.4%. The past five quarters show an acceleration in surprise magnitude, with Q1 2025 (+23.2%), Q4 2024 (+20.1%), and Q2 2025 (+21.0%) all exceeding estimates by more than 20%. This pattern reflects the Street’s persistent underestimation of Meta’s ability to convert AI-driven engagement improvements into advertising revenue growth.

Meta employees work in modern, collaborative office spaces as the company continues to invest heavily in AI infrastructure and technology development.

Post-Earnings Price Movement History

Expected Move & Implied Volatility

The options market is pricing a ±6.5% move for Meta following the January 28 earnings report, translating to a range of $628.66 to $716.06 based on the current stock price of $672.36. This implied move sits above the historical average next-day move of 0.5% (absolute value), suggesting options traders expect elevated volatility driven by uncertainty around 2026 guidance rather than Q4 results.

Expert Predictions & What to Watch

Key Outlook: Guidance Will Drive the Trade

The base case assumes Meta reports Q4 revenue between $49.5B and $50.0B (above consensus of $49.39B) and adjusted EPS between $6.80 and $7.00 (above consensus of $6.70), consistent with the company’s track record of beating estimates. The critical variable is whether management provides 2026 capex guidance that the market can model into free cash flow projections.

Key Metrics to Watch

The January 28 report will determine whether Meta can sustain its track record of beating estimates while also addressing the market’s primary concern: that AI infrastructure spending is accelerating without a clear path to proportional returns.

The stock’s decline from recent highs has created a setup where credible spending discipline could produce a sharp rally, while open-ended capex guidance could extend the decline even if Q4 results beat consensus. Understanding the fundamentals of trading vs investing becomes particularly relevant when evaluating whether to take short-term positions around earnings volatility or maintain long-term holdings through the AI investment cycle.