Meta Platforms stricter cost controls this year and a new US$40 billion share buyback sent shares soaring on Wednesday, as chief executive Mark Zuckerberg dubbed 2023 the "Year of Efficiency."
The parent of Instagram and Facebook cut its cost outlook for 2023 by US$5 billion and projected first-quarter sales that could beat Wall Street estimates.
It said its investments in AI-surfaced content and TikTok short video competitor Reels were starting to pay off.
The company forecast first-quarter revenue between US$26 billion and US$28.5 billion, compared with analysts' average estimates of US$27.14 billion, according to IBES data from Refinitiv.
Meta stock surged nearly 19 per cent in after-hours trade.
If gains hold tomorrow, it would set up the shares for their biggest intraday surge in a decade and add more than $75.5 billion to its existing $401 billion market capitalisation.
Shares of peer Alphabet were up 3.3 per cent and Snap stock rose 1 per cent.
Chief Executive Mark Zuckerberg described the focus on efficiency as part of the natural evolution of the company, calling it a "phase change" for an organisation that once lived by the motto "move fast and break things."
"We just grew so quickly for like the first 18 years," Zuckerberg said in a conference call.
"It's very hard to really crank on efficiency while you're growing that quickly. I just think we're in a different environment now."
The cost cuts reflect Meta's updated plans for lower data center construction expenses this year as the company shifts to a structure that can support both AI and non-AI work, it said in a statement.
Digital ad giant Meta faced a brutal 2022 as companies cut back on marketing spending due to economic worries, while rivals like TikTok captured younger users and Apple privacy updates continued to challenge the business of placing targeted ads.
Its forecast suggests that the advertising market may be recovering as companies increase their marketing budgets, after a long pause due to macroeconomic uncertainties.
"Meta's better-than-feared results should refute concerns over the state of the digital advertising industry following Snap's horrible guidance earlier this week," said Jesse Cohen, senior analyst at Investing.com.
"Despite all the challenges Meta must deal with, there are signs the business is still doing well," he said.
Net income for the fourth quarter ended December 31, however, fell to US$4.65 billion, or US$1.76 per share, compared with US$10.29 billion, or US$3.67 per share, a year earlier.
The decline was largely due to a US$4.2 billion charge related to cost-cutting moves such as layoffs, office closures and an overhaul of the company's data center strategy.
The company reported adjusted earnings of US$1.76 per share, missing the average analysts' estimate of US$2.22 per share.