Meta Platforms (META) Stock Dips on Heavy AI Capex Outlook Despite Strong Earnings

Meta Platforms Inc.’s stock has pulled back in February 2026, trading around $636 to $639 after shedding about 2-3% in recent sessions amid investor concerns over the company’s massive $115 billion to $135 billion capital expenditure guidance for the year, even as core advertising revenue surges and new AI infrastructure deals signal long-term momentum.

As of February 24, 2026, Meta (NASDAQ: META) closed at approximately $636.07, down modestly from recent highs near $655-$660 earlier in the month. The shares have retreated from an all-time peak of around $788-$796 in mid-2025, reflecting a roughly 18-20% decline from that level. Year-to-date performance remains positive but tempered by volatility tied to AI spending fears and broader market dynamics.

The pressure intensified following Meta’s blockbuster Q4 and full-year 2025 earnings released January 28, 2026. The company reported record revenue of $59.89 billion for the quarter, up 24% year-over-year (23% on constant currency), surpassing analyst expectations. Full-year revenue reached $200.97 billion, a 22% increase from 2024. Diluted earnings per share hit $8.88 in Q4, beating estimates, while full-year net income stood at $60.46 billion despite a one-time tax impact from legislative changes.

Advertising, the core driver, delivered $58.14 billion in Q4, up significantly, fueled by 18% growth in ad impressions and 6% higher average price per ad. Family of Apps revenue climbed 25% to $58.94 billion, with daily active people averaging 3.58 billion in December 2025, up 7% year-over-year. Reality Labs, encompassing metaverse and wearables, posted $955 million in revenue but a $6.02 billion operating loss in Q4, though management indicated losses would peak in 2026 before declining.

Meta guided aggressively on investments, forecasting 2026 capex of $115 billion to $135 billion—roughly double 2025’s $72.22 billion—to build out AI infrastructure, data centers, and compute capacity. CEO Mark Zuckerberg emphasized advancing “personal superintelligence” through agentic AI models that personalize feeds, ads, commerce, and messaging. The spending aims to close the gap in generative AI capabilities, with internal AI tools already flattening teams and boosting productivity.

A major validation arrived February 24, 2026, when Meta announced a multi-year, multi-generation partnership with Advanced Micro Devices Inc. to deploy up to 6 gigawatts of AMD Instinct GPUs starting in the second half of 2026. The deal, powered by custom MI450-based chips and Helios rack-scale architecture, represents “double-digit billions” per gigawatt and includes Meta gaining warrants for up to 160 million AMD shares. Shipments for the initial gigawatt begin soon, diversifying Meta beyond Nvidia dominance while supporting next-gen AI workloads.

The AMD pact sparked gains in AMD shares but offered mixed relief for Meta investors wary of execution risks and margin pressure from elevated spending. Free cash flow remains robust at $43.59 billion for 2025, with operating cash flow near $116 billion and cash reserves of $81.59 billion, providing flexibility for dividends, buybacks, and investments.

Meta continues pushing AI across products. Llama models advance open-source efforts, while Ray-Ban Meta smart glasses see explosive demand—sales tripled in recent periods, with waitlists extending into 2026 and international rollout paused due to supply constraints. Updates include enhanced Meta AI features like live translation and detailed visual responses. The company teases further wearables, including a potential smartwatch launch in 2026.

Wall Street leans bullish despite near-term headwinds. Consensus among 43-49 analysts rates Meta a Moderate to Strong Buy, with average 12-month price targets ranging from $835 to $864, implying 31-36% upside from current levels. High targets reach $1,144, low ends around $605-$700. Recent updates include Wells Fargo raising to $856 and others maintaining overweight stances, citing advertising resilience, AI monetization potential, and strong cash generation.

Critics highlight risks: heavy capex could compress margins if AI returns lag, competition from OpenAI, Google, and others intensifies, and regulatory pressures persist. Yet proponents argue Meta’s scale—over 3.5 billion users—and proven ad efficiency position it to capture AI-driven growth. Billionaire investor Bill Ackman recently disclosed a stake, calling the stock undervalued compared to peers.

The next catalyst arrives with Q1 2026 earnings in late April, where updates on capex deployment, AI traction, and guidance revisions will be scrutinized. Positive signs of monetization from agentic features and wearables could fuel a rebound; delays might prolong volatility.

Meta stands at a transformative juncture. Its advertising dominance and user base provide a sturdy foundation, while aggressive AI bets—including partnerships, open models, and wearables—aim to secure future leadership. Investors betting on execution see current levels as an attractive entry amid the AI infrastructure buildout.