Meta Platforms (META 1.90%) has come a long way from its origins as a platform to connect students to its current status as a social media powerhouse and leader in the ongoing artificial intelligence revolution. Meta Platforms was originally founded as TheFacebook in 2004 by Mark Zuckerberg and fellow Harvard students Eduardo Saverin, Andrew McCollum, Dustin Moskovitz, and Chris Hughes.
It began as a social networking site for Harvard students and quickly expanded to other universities and colleges. The website, originally located at thefacebook.com, was an immediate hit at Harvard. The "The" was dropped in August 2005 after the company purchased the domain name facebook.com for $200,000, and it became officially incorporated as Facebook, Inc.
Membership was opened to the general public in 2006, and the company went public in a major initial public offering (IPO) in May 2012. Facebook rapidly expanded its social media dominance through key acquisitions, including Instagram in 2012 and WhatsApp in 2014.
In October 2021, the parent company rebranded to Meta Platforms to reflect a new strategic focus on building the metaverse, an interconnected digital ecosystem blending virtual and augmented reality. While this approach garnered mixed success, the company has more recently shifted its focus to AI and is investing heavily in AI research and development, including advanced conversational AI assistants and open-source models like Llama (Large Language Model Meta AI).
If you want to know more about what Meta does, how Meta makes money, the current state of its financials, and more, you've come to the right place. Let's dive right in.
Image source: Getty Images.
What does Meta do?
As the world's top social media ecosystem, Meta is also a leading technology company that operates a family of apps, including Facebook, Instagram, and WhatsApp. These apps are used by billions of people to connect, share, and find communities.
In addition to consumer-facing use cases for its social media platforms, the company offers tools like Meta Business Suite to help businesses manage their presence, run ad campaigns, and interact with customers across its apps.
Meta's Reality Labs is the division responsible for developing virtual reality (VR) and augmented reality (AR) hardware and software, including the Quest headsets and Ray-Ban smart glasses. Reality Labs also develops online platforms like Horizon Worlds, the Orion AR glasses, and a neural interface wristband.
Meta is investing heavily in AI development and integrating it across its products as part of CEO Mark Zuckerberg's vision for building personal superintelligence. The Meta AI assistant is a conversational AI powered by Meta's large language models (LLMs) that can answer questions, generate creative content, and provide real-time information. This assistant offers features like real-time search, image and video generation, and task assistance.
The Meta AI app is a stand-alone application that provides access to the Meta AI assistant and integrates as a companion app to devices like the Ray-Ban Meta smart glasses and Quest VR headsets. Meta has also continued to roll out integrated AI capabilities within apps like Facebook, WhatsApp, and Instagram.
NASDAQ: META
Key Data Points
How does Meta make money?
Meta makes most of its money from selling targeted advertisements on its platforms: Facebook, Instagram, Messenger, and WhatsApp. The company uses data from user activity to help advertisers show their ads to specific demographics, interests, and behaviors. While advertising is the dominant revenue stream, Meta also generates a smaller amount of income from other areas, such as hardware sales (e.g., VR headsets) and other fees.
Meta is making money from AI too, but primarily through its AI-powered advertising tools, which are significantly increasing revenue and ad performance. Its Advantage+ suite of AI-powered ad solutions is a massive and growing part of the business, which now boasts an annual revenue run rate of over $60 billion.
Meta's financials
Meta had a robust third-quarter 2025, beating expectations with a 26% year-over-year revenue increase to $51.24 billion that was driven by increased ad impressions and user engagement. The company's reported earnings per share (EPS) was $1.05, but a $15.93 billion one-time tax charge resulted in a significant miss of the expected $6.72. Excluding the charge, adjusted net income would have been between $15.93 billion and $18.64 billion.
Daily active people across its family of apps grew 8% year over year to 3.54 billion, and ad impressions increased by 14%. The average price per ad rose 10% year over year thanks to AI-driven improvements.
Meta's investments in AI are improving user engagement and monetization, with time spent on Facebook and Instagram increasing significantly due to AI-powered recommendation systems. Meta anticipates substantially higher capital expenditures in 2026 for AI infrastructure. While the AI push is a growth driver, the high cost of this investment is pressuring Meta's current profitability.
The Reality Labs division has been the biggest factor negatively impacting Meta's profitability, though, and it is consistently losing billions of dollars while the main advertising business remains quite profitable. In the most recent quarter, Reality Labs posted a significant operating loss of $4.4 billion.
Recent developments
While Meta has not provided a specific number for its 2026 AI spending, management has stated that capital expenditures (including AI) will be "notably larger" than in 2025, when capex is expected to be between $70 billion and $72 billion. Some analysts project that 2026 capital expenditures could exceed $100 billion. This spending is primarily for AI infrastructure, such as data centers and compensation for AI researchers.
In summer 2025, Meta announced the creation of a new, overarching AI division called Meta Superintelligence Labs (MSL). This division has consolidated Meta's various AI efforts under one umbrella. It is led by Alexandr Wang (founder of Scale AI, which Meta invested in heavily) and Nat Friedman. In a subsequent restructuring in August 2025, Meta further divided Meta Superintelligence Labs into four specialized groups to streamline efforts.
One group will be focused on advancing large foundation models like the Llama series and building machine superintelligence. A second group will focus on building AI-powered products, including the Meta AI assistant, and a third will be responsible for building and maintaining the massive computing power and data centers needed for large-scale AI projects. The fourth is the long-standing research division, Fundamental AI Research (FAIR), that will continue to focus on longer-term projects and core scientific progress.
Meta recently announced a joint venture with funds managed by Blue Owl Capital to develop the Hyperion data center campus in Richland Parish, Louisiana. This is a project worth approximately $27 billion. The project is part of Meta's larger strategy to build multiple AI-optimized data centers to support its expanding AI infrastructure.
