01:45 PM EST, 01/27/2025 (MT Newswires) -- Meta Platforms ( META ) is expected to post better-than-expected fourth-quarter earnings, though its revenue in the first quarter could take a hit from foreign exchange pressure, BofA Securities said Monday.

The Facebook and Instagram parent is scheduled to report fourth-quarter results Wednesday. BofA expects GAAP earnings of $7.05 a share on revenue of $46.98 billion. Wall Street is looking for $6.76 and $47.03 billion, respectively, according to the brokerage.

The social media giant's revenue strength is expected to be driven by factors such as customer relationship management system integration with larger clients, which, combined with artificial intelligence integrations, should help drive incremental ad spend, BofA said in a note to clients.

The brokerage projects fourth-quarter daily active people at 3.32 billion and average revenue per person at $13.81. The Street is looking for 3.33 billion and $13.80, respectively. "For (average) time spent per user, Sensor Tower data suggests some pressure as (Facebook and Instagram) lap strong usage growth from last year aided by Reels and AI-driven content targeting improvements," BofA analyst Justin Post said.

For the ongoing quarter, BofA expects revenue of $40.77 billion, which it said would lag the Street's $41.72 billion view. "Investors we spoke to are expecting additional (foreign exchange) pressure in the (first-quarter revenue) guide, and comps ease as year progresses, so (the) Street may be looking for any commentary suggesting stabling growth (post-first quarter)," Post wrote.

On Friday, Meta said it planned to invest up to $65 billion in capital expenditures in 2025 as it looks to expand its AI infrastructure.

"We think Meta is likely seeing positive returns on its initial AI investments and has a strong AI product pipeline ahead," Post said Monday. "However, recent reports of DeepSeek's strong capabilities and low cost could raise questions on Meta's aggressive capex growth."

Chinese startup DeepSeek recently launched a large language model, triggering potential competition concerns. The model "rivals" Meta's Llama 3.1 and Microsoft ( MSFT ) -backed OpenAI's ChatGPT, according to Wedbush Securities.

"We think Meta's AI-driven ad improvements still have several quarters to play out," Post wrote. The company is poised to see growth this year from strengths in areas like expanding AI and machine learning capabilities, increasing short-form video usage and improving video platform monetization. Meta's expanding AI capabilities could drive "positive product surprises" this year, according to the note.

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