Meta Platforms(US:META) Guolian Minsheng Securities·2026-02-06 07:50Investment Rating - The report maintains a "Buy" rating for Meta, indicating a strong outlook for the company's stock performance relative to the benchmark index [11]. Core Insights - Meta's Q4 2025 performance exceeded expectations, with revenue reaching $59.9 billion, a 24% year-over-year increase, and GAAP EPS of $8.88, significantly surpassing market forecasts [2]. - The company has provided a strong revenue guidance for Q1 2026, estimating between $53.5 billion and $56.5 billion, alongside a substantial increase in capital expenditures for 2026, projected at $115 billion to $135 billion, primarily focused on AI capabilities and infrastructure [2][5]. - The Family of Apps segment generated $58.9 billion in revenue for Q4 2025, up 25% year-over-year, driven by a 24% increase in advertising revenue [2]. - Reality Labs reported $955 million in revenue for Q4 2025, a 12% decline year-over-year, with future investments shifting towards AI glasses and wearable devices [2]. Business Performance and User Metrics - In Q4 2025, the Family of Apps had over 3.5 billion daily active users, with significant growth in platforms like Facebook, Instagram, and WhatsApp [3]. - Instagram Reels saw over a 30% increase in viewing time year-over-year, while Threads experienced a 20% increase in user engagement due to improved recommendation systems [3]. AI Integration and Business Impact - Meta's AI initiatives are enhancing core business operations, with advertising and content recommendations entering a "model scaling" phase [4]. - The GEM advertising model and new sequence learning architecture contributed to a 3.5% increase in Facebook click-through rates and over 1% improvement in Instagram conversion rates [4]. - The introduction of large language models (LLMs) into recommendation systems has significantly improved content understanding and user engagement, leading to the highest revenue increment from product optimization in two years [4]. Capital Expenditure and Profit Outlook - Meta has raised its capital expenditure guidance for 2026 to $115 billion to $135 billion, reflecting a substantial year-over-year increase [5]. - Despite the rise in capital expenditures, the company expects absolute operating profits in 2026 to exceed those of 2025, supported by improved AI advertising efficiency and core business growth [5]. - The report expresses confidence in Meta's long-term growth potential driven by AI, with a clear path for revenue and profit enhancement through advertising and recommendation system improvements [5].