Meta Platforms (META) rallied after reporting its earnings in late January, popping more than 10% on the day after disclosing its financial figures. However, the stock has drifted lower since and now trades below where it was headed into its quarterly report.
Investors initially cheered the firm’s strong conclusion to 2025, which included Q4 revenue growth of 24% and Street-beating earnings. This was offset somewhat by a forecast for 2026 capital expenditures that reached as high as $135B. The spending projection has triggered a sharp debate among investors, with Meta’s plans to nearly double its AI-related spending from the $72.2 billion seen in 2025.
How will investors weigh results versus spending as 2026 unfolds? Below are some perspectives on what could be in store for the Facebook parent.
What Do Seeking Alpha Analysts Say About Meta’s Future?
Analysts who are enthusiastic about Meta’s prospects pointed to the firm’s unprecedented scale, noting that its Family of Apps now reaches 3.58 billion daily active people, roughly 43% of the global population. They highlight that AI is already driving tangible results in the core advertising business, contributing to an 18% increase in ad impressions and a 30% rise in Instagram Reels watch time.
These bulls also emphasize Meta’s financial fortress, including a cash position of $81.6B and operating cash flows of $116B in 2025. With Q1 2026 revenue guidance of $53.5B to $56.5B implying growth rates as high as 34%, optimists see the capex surge as a justified investment in sustainable growth.
That said, Meta has its critics as well. Bears highlighted that Meta’s costs and expenses are outstripping revenue growth, with expenses jumping 40% in Q4 alone while revenues rose just 24%. They are particularly skeptical of the pursuit of artificial general intelligence, noting that even the low-end $115B capex target could evaporate free cash flow and mirror the prior multi-year losses in Reality Labs, which has accumulated over $80 billion in total losses since 2020.
Here’s a breakdown of what some analysts had to say:
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Stone Fox Capital, Rating: Strong Buy: “Meta Platforms demonstrates that its AI-driven capex surge is justified by exceptional revenue growth and robust operating cash flows… The tech giant won’t have any problems absorbing this additional capex, but the financial metrics will likely dip.” — Meta Platforms: Don’t Fear AI Spending
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Bill Gunderson, Rating: Strong Buy: “Meta is no longer just a large-cap technology company; it’s a compounding earnings machine with one of the strongest profit engines in the market… Meta’s data center spending is already paying off, and that payoff is visible in its operating margins rebounding into the 40%+ range.” — Meta Is Playing The Long Game, And It’s Paying Off
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Kody’s Dividends, Rating: Buy: “Meta’s aggressive investments are defensible. Throughout its business, the investments being made by the company are yielding results… The company’s personal superintelligence strategy is making interactions more relevant, which should continue to drive improved user engagement moving forward.” — Meta Platforms: Snatch Up This Big Tech Deal Now
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YR Research, Rating: Hold: “[CEO Mark] Zuckerberg’s capital spending plans, directed at becoming a leading AI lab, are increasingly becoming as big a determinant of the stock’s performance… I think it’s highly likely that Meta will narrow the guidance range upwards and possibly raise it in the coming Q1.” — Meta: Spending Plans Have One More Punch Before I’ll Buy
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Rational Techne, Rating: Sell: “The company plans to dramatically accelerate their capex spend in 2026 in pursuit of their AI ambitions… degrading the economics of a world-class, capital-light core business. META’s current AGI ambitions have all the potential to make the failed Metaverse look like a child’s failed lemonade stand by comparison.” — Meta Platforms Exemplifies How Fanciful AI Pursuits Damage Shareholder Value
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The Value Portfolio, Rating: Sell: “Managing losses from $20 billion in annual Realty Labs losses is dramatically different from managing losses from a $90 billion growth in capex. That makes us against investing in the company… the company doesn’t actually have a clear plan on how to monetize its AI investment.” — Meta Platforms – The Jump Isn’t Justified
What Do the Quant Ratings Say?
Meta Platforms currently carries a high standing in Seeking Alpha’s quant ratings, supported by robust profitability and growth metrics. While capex expansion has introduced volatility in valuation grades, the company continues to outperform the broader communication services sector across several key performance indicators.
Profitability: The company maintains exceptional profitability, receiving an A+ grade. With an operating margin of 41% and over $116 billion in operating cash flow for 2025, Meta significantly outperforms the sector median and demonstrates high operational efficiency despite rising infrastructure costs.
Growth: Meta earns a high grade for growth, driven by a 24% year-over-year revenue increase in its most recent quarter. Analysts expect this momentum to continue, with Q1 2026 revenue guidance of $53.5 billion to $56.5 billion implying growth rates as high as 34%, far exceeding the sector average.
Valuation: Valuation receives a B- grade, reflecting a forward P/E ratio of approximately 19x to 22x. While this is a premium compared to some peers, it remains well below the company’s 10-year average P/E of 26.4x, suggesting the stock may still be undervalued relative to its historical growth.
Momentum: The stock carries an A- grade for momentum. Following its 2022 reset, Meta has delivered a three-year average total return of 52.84%, vastly outperforming the S&P 500’s 22.6% return over the same period.
Earnings Revisions: Meta shows strength in earnings revisions, earning a B grade. The company’s Q4 EPS beat of $8.88 has led many analysts to raise their 2026 and 2027 estimates, with consensus now projecting 2026 EPS to spike by 26% to roughly $29.60.
What’s the Latest News on Meta?
Meta (META) recently surprised the market by raising its 2026 capex guidance to a range of $115 billion to $135 billion, a significant step up from the $72.2 billion spent in 2025. This surge is primarily intended to fund Meta Superintelligence Labs and expand data center capacity to compete with hyperscalers like Alphabet (GOOGL) and Amazon (AMZN).
On the product front, CEO Mark Zuckerberg announced a strategic pivot for Reality Labs, focusing on smart glasses and wearables rather than purely virtual reality. While Reality Labs losses hit $6 billion in Q4, management expects 2026 to be the peak for these losses before a gradual reduction begins. Meanwhile, the company’s core AI efforts are yielding results, with Instagram Reels watch time up 30% and video generation tools reaching a $10 billion revenue run rate.