Meta Platform Shares Jump on Strong Outlook. Can the Stock's Momentum Continue?

Core Insights - Meta Platforms reported strong Q4 results, with revenue and adjusted EPS surpassing analyst estimates, leading to a surge in stock price [1][3] - The company has increased its capital expenditures for 2026 to a range of $115 billion to $135 billion, primarily for AI initiatives [2] - Despite concerns over capital expenditures, Meta's core business remains robust, with a 24% year-over-year revenue increase [3][4] Financial Performance - Q4 revenue reached $59.9 billion, an increase of 24% year over year, while adjusted EPS rose by 11% to $8.88, exceeding analyst expectations [3] - Advertising revenue also grew by 24% to $58.1 billion, driven by an 18% increase in ad impressions and a 6% rise in average price per ad [4][5] - Reality Labs revenue fell by 12% year over year to $955 million, with operating income from social media apps increasing by 9% to $30.8 billion [4] User Growth and Future Guidance - Family daily active people (DAP) increased by 7% year over year to 3.58 billion, indicating continued user growth [5] - For Q4, Meta guided revenue to be between $53.5 billion and $56.5 billion, reflecting a year-over-year growth of 26% to 34% [5] Valuation and Investment Outlook - Meta is trading at a forward price-to-earnings (P/E) ratio of around 24 times 2026 analyst estimates, positioning it as one of the cheaper megacap AI stocks [6] - The company's advertising growth is supported by advanced ad recommendation models and plans to expand ad monetization on platforms like WhatsApp and Threads [6] - Given its valuation and growth outlook, Meta is considered a stock to own for 2026, even after recent price increases [7]