Meta Platforms (META) stock is once again in the limelight after the company reported good earnings results, taking its shares close to record highs. Although Wall Street has generally reacted well to the accelerating revenue growth of Meta Platforms and its aggressive artificial intelligence (AI) plans, at least one major investment firm is cautioning investors not to get overly bullish on the tech giant’s shares. In a recent interview, Needham senior analyst Laura Martin said Meta Platforms is “priced for perfection” but could potentially decline 10% to 15% if growth targets are not met.
META stock has risen 7% in the past month due to Meta’s aggressive AI plans for its advertisements and management’s positive outlook on the business. However, the current high optimism surrounding Meta Platforms shares has led investors to price its growth potential at an unforgiving level. With a massive capital expenditure cycle in place, the market is no longer rewarding good enough execution.
The warning comes at a time when the valuations of other major tech stocks are once again facing challenges due to increasing spending plans and a lower tolerance for margin pressure.
Meta Platforms operates the world’s largest social media platform through its Facebook, Instagram, WhatsApp, and Messenger services, along with its Reality Labs segment dedicated to virtual and augmented reality technologies. With its headquarters in Menlo Park, California, Meta Platforms has a current market capitalization of around $1.8 trillion, making it one of the most valuable companies in the world.
Over the last 52 weeks, the stock has traded between a low of $479.80 and a high of $796.25. This is a reflection of its strong earnings momentum and the volatility of the stock related to the investing cycles of artificial intelligence. META stock is currently trading at $697 and has outperformed the S&P 500 Index ($SPX). Investors have clearly rewarded the company for the acceleration of its growth after the efficiency reset of 2022 to 2023.
https://www.barchart.com
From the perspective of valuation, the stock currently trades at 24 times trailing earnings and 24 times forward earnings. The price-to-sales (P/S) ratio is above 9 times as well. These numbers are at the upper end of the stock’s historical range, further supporting the idea that the good news is already priced into META.
Meta Platforms’ fourth-quarter and full-year 2025 results were undoubtedly strong. Revenue for Q4 was up 24% year-over-year (YOY) and came in at almost $60 billion. This was due to an 18% increase in ad impressions and a 6% increase in average ad price during the period. For the full year, revenue was up 22% YOY and came in at more than $200 billion, reflecting a robust digital advertising environment.
However, the story is not so rosy when looking at expenses. Fourth-quarter expenses went up by 40% YOY while full-year expenses went up by 24% YOY. This is a reflection of the significant investments Meta is making in AI infrastructure and technical talent. The company spent $72.2 billion in capital expenditures in 2025 and is projecting a significant increase in capex in 2026 to between $115 billion and $135 billion. This projected increase in capex is related to the upcoming rollout of Meta’s Superintelligence Labs.
Guidance provided by Meta’s CFO is for revenue growth of 30% or more in Q1 2026 in constant currencies. This rate marks a significant acceleration from prior quarters. While that acceleration is great, it leaves little room for disappointment. The problem that concerns Needham is that much of the expense is irreversible in the near term. This means that Meta Platforms’ margins could compress rapidly if the growth slows.
Analysts assign a “Strong Buy” consensus rating on META stock with a mean price target at $855.88, indicating a potential increase of 23% from the current price. The high price target for META is $1,144 while the lowest target price is $700, showing a wide range of price targets.
Analyst Laura Martin’s bearish view on the company’s shares is noteworthy, as it focuses less on Meta’s competitive position and more on the timing of the firm’s performance. Martin believes that being in front of a capex cycle has historically implied higher downside risk, particularly as returns on invested capital have declined. Needham estimates that Meta’s operating margins may decline from 40% in 2025 to the low 30% range in 2026, a significant reset given the company’s premium valuation.
However, Martin was more positive on the ad-tech space as a whole. The analyst highlighted strong results seen by digital advertising companies in the fourth quarter, seeing positive read-throughs for companies like Alphabet (GOOGL), The Trade Desk (TTD), and Magnite (MGNI), even if there’s weakness for Meta shares.
https://www.barchart.com
On the date of publication, Yiannis Zourmpanos had a position in: META. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
2025 was the year Meta Platforms (NASDAQ: META) made its intentions clear. The company spent aggressively on artificial intelligence (AI) infrastructure, doubled down on open-source models through Llama, and reshaped its organization to prioritize speed and execution. Investors largely accepted the strategy, even as margins came under pressure.
Going into 2026, the question is no longer whether Meta is serious about AI. The real question now is whether Meta can convert ambition into results.
Image source: Getty Images.
Much of Meta’s AI narrative is well known. Investors understand that the company has committed tens of billions of dollars to compute and data centers. They know Meta is taking a different path from competitors by pushing Llama as an open-source foundation rather than a closed, monetized product. They’ve also seen management reorganize AI teams under Superintelligence Labs to speed up execution.
None of this is controversial.
What remains uncertain is whether these moves translate into durable economic gains or merely higher costs with more extended payback periods. That uncertainty is what makes 2026 an important year for the company.
The bullish argument for Meta going into 2026 rests on execution, not hype.
First, AI has the potential to materially improve Meta’s core advertising business. Better targeting, smarter ranking, and more effective creative tools not only boost engagement but also improve return on ad spend. If Meta’s AI systems continue to make ads more efficient, revenue growth can accelerate without a proportional increase in ad load. Arguably, the use of AI has already contributed toward Meta’s solid 26% growth in revenue in the first nine months of 2025.
Second, Llama gives Meta a strategic advantage that doesn’t show up neatly on income statements. By positioning Llama as open infrastructure, Meta pulls developers and enterprises into its ecosystem while pushing deployment costs outward. If Llama becomes a default layer for AI development, Meta benefits indirectly through better products, faster innovation, and ecosystem gravity.
Third, Meta’s scale remains unmatched. With billions of users across Facebook, Instagram, and WhatsApp, the company can deploy AI features, gather feedback, and iterate faster than almost any competitor. If Meta’s restructured AI organization delivers on speed, that feedback loop becomes a powerful compounding advantage.
If these pieces come together, Meta’s long-term earnings power could improve further from here.
While there are potential upsides, the downside risks aren’t remote either. Meta doesn’t need to fail for the stock to disappoint. It only needs to execute slower than investors expect.
The most obvious risk is that AI spending stays elevated longer than anticipated. Building and running large-scale models is expensive, and the payoff may arrive later than the market hopes. If margins remain under pressure without clear signs of operating leverage, sentiment could sour quickly.
There’s also risk in Meta’s open-source strategy. Llama’s success depends on sustained developer adoption. If closed models continue to outperform open ones in terms of convenience or performance, developers may drift back toward proprietary ecosystems, thereby weakening Meta’s influence. To this end, some of the leading AI models are from closed models, such as ChatGPT, Grok, and Anthropic.
Finally, regulatory and macro risks haven’t disappeared. Advertising budgets remain cyclical, and regulatory scrutiny around AI and data usage could introduce new constraints.
Whether Meta is a buy going into 2026 comes down to a single issue: Can Meta turn AI essentially from a cost center into a profit amplifier?
Investors should watch for specific signals:
Evidence that AI-driven ad improvements are lifting monetization efficiency.
Faster rollout of AI features across Meta’s apps.
Signs of operating leverage reemerging, even as AI investment continues.
Stability within Meta’s AI organization, with fewer restructurings and a more precise execution rhythm.
These indicators matter far more than flashy model releases or benchmark scores.
Meta stock going into 2026 isn’t a bet on AI hype. It’s a bet on execution.
For long-term investors comfortable with near-term volatility, Meta can make sense as a conditional buy, provided they believe the company can convert its scale, infrastructure, and ecosystem into tangible returns over the next few years.
For others who need clearer margin expansion or faster payback, it could be better to wait on the sidelines for clearer signs.
Either way, it’s a stock to follow closely in 2026.
Before you buy stock in Meta Platforms, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Meta Platforms wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $474,578!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,141,628!*
Now, it’s worth noting Stock Advisor’s total average return is 955% — a market-crushing outperformance compared to 196% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
Lawrence Nga has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool has a disclosure policy.
Dan Loeb is known as a mover and a shaker in the investing world. He founded the New York-based hedge fund Third Point in 1995. It now has roughly $11.5 billion in assets under management. Loeb’s net worth stands at $3.3 billion, according to Forbes.
The activist investor did some moving and shaking in his hedge fund’s portfolio in the fourth quarter of 2023. Loeb reduced his stakes in Amazon(NASDAQ: AMZN) and Microsoft(NASDAQ: MSFT). However, the billionaire investor bought another “Magnificent Seven” stock.
Taking profits
Loeb sold 210,000 shares of Microsoft in Q4. While this reduced Third Point’s stake in the tech giant by over 9.4%, Microsoft remains the second-largest holding in the hedge fund’s portfolio.
The billionaire investor has owned Microsoft off and on since 2006. He most recently initiated a new position in the fourth quarter of 2022, just in time to ride the generative AI wave started by OpenAI’s launch of ChatGPT. Microsoft was a major beneficiary of this wave thanks to its partnership with OpenAI.
Third Point first owned Amazon in late 2019 and held the stock through the second quarter of 2022. Loeb didn’t stay on the sidelines long with the e-commerce and cloud services leader. He initiated a new position in Amazon in the second quarter of 2023. Although he reduced Third Point’s stake in the stock by nearly 10.3% in Q4 2023, Amazon still ranks as the hedge fund’s third-largest holding.
Why did Loeb trim his positions in Amazon and Microsoft? The most likely reason is he wanted to take some profits. Both stocks delivered impressive gains last year.
A bigger bet on Meta
Although Loeb cooled somewhat on two Magnificent Seven stocks, he placed a bigger bet on Meta Platforms(NASDAQ: META). The hedge fund manager increased Third Point’s stake in Meta by nearly 5.5% in Q4 2023. The $410.6 million value of the position made Meta the sixth-largest holding for Third Point at the end of 2023.
Loeb’s history with Meta goes back to the second quarter of 2016 when he first bought the stock. He owned shares of the social media company for a little over two years before exiting the position. The activist investor again bought Meta stock in the second quarter of 2020 and maintained a position through 2021 Q4. Loeb went back to the well in the third quarter of 2023 with another new stake in Meta.
Like Amazon and Microsoft, Meta enjoyed a generative AI tailwind last year. However, I suspect that wasn’t Loeb’s primary reason for adding to his position in the stock. Instead, my hunch is that Loeb liked Meta’s moves to increase its profitability.
Those efforts are paying off. Meta’s earnings more than tripled year over year in 2023 Q4. Full-year profits jumped 69%.
Did Loeb make the right moves?
In one sense, Loeb went one for three with these Magnificent Seven transactions. Loeb’s decision to increase Third Point’s stake in Meta is already paying off. Meta stock has skyrocketed over 45% since the end of 2023. However, Amazon and Microsoft are also up by double-digit percentages year to date. Loeb could have made more money by holding his shares in both companies.
However, trimming the positions in Amazon and Microsoft could still have been the right call for Loeb. Both stocks make up significant percentages of Third Point’s portfolio. You can’t blame any investor for wanting to ensure their holdings aren’t overly concentrated in a handful of stocks.
Over the long term, I think that Loeb — and other investors — will be well served by owning all three of these stocks. Amazon’s and Microsoft’s cloud businesses should continue to grow robustly thanks largely to AI. I like Meta’s focus on business messaging and smart glasses with embedded AI assistants. I predict Amazon, Microsoft, and Meta will remain magnificent for a long time to come.
Should you invest $1,000 in Meta Platforms right now?
Before you buy stock in Meta Platforms, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Meta Platforms wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Keith Speights has positions in Amazon, Meta Platforms, and Microsoft. The Motley Fool has positions in and recommends Amazon, Meta Platforms, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Shares of Facebook parent Meta overtook the dubious honor as the biggest loser on the S&P 500 this week as the Silicon Valley giant bleeds money to fund its CEO Mark Zuckerberg’s metaverse vision and underscores big tech’s 2022 downfall.
It’s been a rough year for Zuckerberg and Meta.
Getty Images
Key Facts
Meta stock has faltered all year, but crashed 25% last Thursday after reporting concerning quarterly earnings and is down a further 11% this week to a seven-year low of below $90.
The social media titan is down 73.7% year-to-date and nearly 80% from its 2021 high of $384.
The most recent dip was enough to overtake the S&P’s prior worst performer, Invisalign maker Align Technology, which is down 73.2% in 2022.
Meta’s crash has been much more impactful than Align’s, accounting for 0.7% of the S&P’s weight compared to 0.04% for Align.
Key Background
Meta’s market capitalization of $236 billion is a far cry from its $1 trillion market cap last summer, and the company is now just the 34th largest public company in the world after ranking as high as fifth. The company changed its name from Facebook to Meta last fall to reflect its pivot to augmented reality, or the metaverse. The metaverse has proven to be an unmitigated disaster for Meta, reporting $9.4 billion in losses in the division year-to-date as macroeconomic headwinds further eat into its bottom line. The company reported a 49% decline in profits, buoyed by a decline in its advertising business, last Wednesday, sending the stock spiraling.
Big Number
48%. That’s how much the FAANG group of tech giants (Facebook parent Meta, Amazon, Apple, Netflix and Google parent Alphabet) is down collectively year-to-date. That far outpaces the 22% decline for the S&P, weighed down by the five companies that account for 12% of the index’s weight.
Forbes Valuation
Zuckerberg’s net worth has fallen by $104 billion over the past year to $32.8 billion, according to our calculations. The third-wealthiest person in the world as of last October, Zuckerberg is now the 29th-richest.
Shares of Meta Platforms, Google-owner Alphabet and other companies that sell digital ads dropped late on Thursday after Snapchat owner Snap Inc blamed inflation for its slowest revenue growth since going public five years ago.
Snap was the first major social media company to release its September-quarter earnings, and its stock tumbled 25% following the disappointing results after the bell. Snap warned that it would see no revenue growth in the normally busy holiday quarter.
Shares of other companies that sell internet advertising also fell, with Facebook-owner Meta down about 4%, Alphabet down 2% and Pinterest losing nearly 8%. All together the sell-off in late trading erased over $40 billion in stock market value from those and other internet ad companies, including Spotify and Roku.
Snap’s warning comes after already steep losses in shares of social media companies, with Meta down about 60% year to date, and Pinterest down almost 40%.
Investors worry that the economy could become seriously damaged by the US Federal Reserve’s aggressive interest rate hikes aimed at cooling decades-high inflation.
Last trading at about $8 a share, Snap’s stock has now fallen 90% from its record high close in September 2021. Snap debuted on the stock market in a hotly anticipated initial public offer in 2017 that priced its stock at $17.
In a letter to investors, Snap said inflation caused some advertisers to reduce their marketing budgets.
Revenue for the third quarter ended Sept. 30 was $1.13 billion, an increase of 6% from the prior-year quarter. The figure narrowly missed analyst expectations of $1.14 billion, according to Refinitiv.
The company announced in August it would lay off 20% of all employees and discontinue projects such as gaming and a flying camera drone, in order to cut costs and steel itself against a deteriorating economy.
Alphabet reports its quarterly results on Tuesday, followed by Meta on Wednesday.
