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META's AI-Push Drives Advertising Growth: More Upside Ahead?
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Key Takeaways
META's ad revenues rose 22.1% in 2025 to $196.18B, making up 97.6% of total revenues for the year.
In Q4 2025, META's AI upgrades lifted ad clicks on Facebook 3.5% and conversions on Instagram by over 1%.
META expanded Threads ads globally and is rolling out WhatsApp Status ads to boost future monetization.
Meta Platforms (META - Free Report) is infusing AI to improve content recommendations and ad ranking, which is driving user engagement and advertising revenue growth. In 2025, advertising revenues increased 22.1% from 2024 to $196.18 billion and accounted for 97.6% of total revenues, as well as 98.7% of Family of Apps revenues. In the fourth quarter of 2025, advertising revenues jumped 24.3% year over year to $58.14 billion and accounted for 98.6% of Family of Apps revenues, as well as 97.1% of total revenues.
Improved engagement and user growth have been driving up ad impressions, which increased 18% in the reported quarter. The average price per ad increased 6% year-over-year, benefiting from increased advertiser demand, largely driven by improved ad performance. In the reported quarter, META doubled the number of GPUs used to train its GEM model for ad ranking and adopted a new sequence learning model architecture. These improvements drove a 3.5% lift in ad clicks on Facebook and a more than 1% gain in conversions on Instagram in the fourth quarter of 2025.
META’s initiatives to boost monetization of its services are expected to drive advertising revenues over the long term. The company is focusing on tuning its systems to identify the right time and place to deliver ads, which will continue to preserve user experience. Meta Platforms is planning to bring ads to its newer platforms. Ads in Threads are now expanded to the remaining countries, including the U.K., the European Union, and Brazil. On WhatsApp, the company expects to complete the rollout of ads in Status throughout the year. META’s investments to integrate AI across all layers of the marketing and customer engagement funnel are expected to further drive monetization.
Meta Platforms and its advertising peers, Alphabet (GOOGL - Free Report) and Amazon (AMZN - Free Report) , are expected to absorb a majority of global ad spending by 2030. META is also spending heavily on AI research, models and infrastructure. The company now expects 2026 capital spending between $115 billion and $135 billion. Meta Platforms expects first-quarter 2026 total revenues to be in the range of $53.5-56.5 billion. The Zacks Consensus Estimate for first-quarter 2026 revenues is pegged at $51.38 billion, indicating 21.4% growth from the figure reported in the year-ago quarter.
META Faces Tough Competition in Ad Space
Meta Platforms is facing tough competition from Alphabet and Amazon in the advertising domain.
Alphabet’s Search business is benefiting from AI infusion. The company has been actively embedding AI, especially within Search, to enhance user experience, provide better AI-focused features and consequently improve ad performance. AI Overviews and AI Mode are driving overall queries and commercial queries, thereby driving monetization opportunities.
Amazon’s rich partner base is allowing advertisers to buy ad space on Netflix, Spotify and SiriusXM Media through Amazon Ads, thereby expanding its advertising reach beyond its own properties. The strong performance in advertising reflects successful AI-powered optimization of the platform and growing market share in digital advertising.
Meta Platforms shares have climbed 6.6% in the trailing 12 months, underperforming the broader Zacks Computer and Technology sector’s return of 27.8%.
META’s Stock Performance
Image Source: Zacks Investment Research
Meta Platforms stock is trading at a premium, with a forward 12-month price/sales of 7.81X compared with the broader sector’s 7.44X. META has a Value Score of C.
META Stock Trades at a Premium
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for first-quarter 2026 earnings is pegged at $6.65 per share, up 3.1% over the past 30 days, suggesting 3.4% year-over-year growth.
Image: Bigstock
META's AI-Push Drives Advertising Growth: More Upside Ahead?
Key Takeaways
Meta Platforms (META - Free Report) is infusing AI to improve content recommendations and ad ranking, which is driving user engagement and advertising revenue growth. In 2025, advertising revenues increased 22.1% from 2024 to $196.18 billion and accounted for 97.6% of total revenues, as well as 98.7% of Family of Apps revenues. In the fourth quarter of 2025, advertising revenues jumped 24.3% year over year to $58.14 billion and accounted for 98.6% of Family of Apps revenues, as well as 97.1% of total revenues.
Improved engagement and user growth have been driving up ad impressions, which increased 18% in the reported quarter. The average price per ad increased 6% year-over-year, benefiting from increased advertiser demand, largely driven by improved ad performance. In the reported quarter, META doubled the number of GPUs used to train its GEM model for ad ranking and adopted a new sequence learning model architecture. These improvements drove a 3.5% lift in ad clicks on Facebook and a more than 1% gain in conversions on Instagram in the fourth quarter of 2025.
META’s initiatives to boost monetization of its services are expected to drive advertising revenues over the long term. The company is focusing on tuning its systems to identify the right time and place to deliver ads, which will continue to preserve user experience. Meta Platforms is planning to bring ads to its newer platforms. Ads in Threads are now expanded to the remaining countries, including the U.K., the European Union, and Brazil. On WhatsApp, the company expects to complete the rollout of ads in Status throughout the year. META’s investments to integrate AI across all layers of the marketing and customer engagement funnel are expected to further drive monetization.
Meta Platforms and its advertising peers, Alphabet (GOOGL - Free Report) and Amazon (AMZN - Free Report) , are expected to absorb a majority of global ad spending by 2030. META is also spending heavily on AI research, models and infrastructure. The company now expects 2026 capital spending between $115 billion and $135 billion. Meta Platforms expects first-quarter 2026 total revenues to be in the range of $53.5-56.5 billion. The Zacks Consensus Estimate for first-quarter 2026 revenues is pegged at $51.38 billion, indicating 21.4% growth from the figure reported in the year-ago quarter.
META Faces Tough Competition in Ad Space
Meta Platforms is facing tough competition from Alphabet and Amazon in the advertising domain.
Alphabet’s Search business is benefiting from AI infusion. The company has been actively embedding AI, especially within Search, to enhance user experience, provide better AI-focused features and consequently improve ad performance. AI Overviews and AI Mode are driving overall queries and commercial queries, thereby driving monetization opportunities.
Amazon’s rich partner base is allowing advertisers to buy ad space on Netflix, Spotify and SiriusXM Media through Amazon Ads, thereby expanding its advertising reach beyond its own properties. The strong performance in advertising reflects successful AI-powered optimization of the platform and growing market share in digital advertising.
META’s Share Price Performance, Valuation & Estimates
Meta Platforms shares have climbed 6.6% in the trailing 12 months, underperforming the broader Zacks Computer and Technology sector’s return of 27.8%.
META’s Stock Performance
Image Source: Zacks Investment Research
Meta Platforms stock is trading at a premium, with a forward 12-month price/sales of 7.81X compared with the broader sector’s 7.44X. META has a Value Score of C.
META Stock Trades at a Premium
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for first-quarter 2026 earnings is pegged at $6.65 per share, up 3.1% over the past 30 days, suggesting 3.4% year-over-year growth.
Meta Platforms, Inc. Price and Consensus
Meta Platforms, Inc. price-consensus-chart | Meta Platforms, Inc. Quote
Meta Platforms currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.