Meta Stock: Is It Time for Investors to Buy the Dip?

Shares of social media giant Meta Platforms (NASDAQ: META) are getting hammered. The stock fell as much as 10% in early trading on Thursday after the company reported its first-quarter results late Wednesday, deepening a sell-off that has carved more than 20% off shares from their fall 2025 high near $796.

But there's a curious mismatch here.

The actual quarterly numbers were excellent, with revenue growth accelerating and an impressive operating margin of 41%. Meanwhile, the stock's drop arguably comes down almost entirely to one line in the outlook: a higher 2026 capital expenditure forecast.

So is this a buying opportunity? It could be.

Image source: Getty Images.

An accelerating business

Looking past the share-price reaction, Meta's first-quarter results were strong.

Revenue rose 33% year over year to $56.3 billion -- a meaningful acceleration from 24% growth in the fourth quarter of 2025. Even on a constant-currency basis, revenue rose 29%.

Further, the quarter's drivers were broad-based.

Ad impressions across Meta's family of apps grew 19% year over year (up from 18% in Q4), and average price per ad climbed 12% (up from just 6% in Q4).

Additionally, daily active users averaged 3.56 billion in March -- a 4% year-over-year increase despite internet disruptions in Iran and a restriction on access to WhatsApp in Russia that weighed on this metric.

Profitability remained solid, too. Meta's operating income was $22.9 billion, with the operating margin holding at 41%. And earnings per share came in at $10.44, helped by an $8.03 billion one-time tax benefit. Stripping that out, earnings per share would have been $7.31 -- still up about 14% year over year. And Meta's free cash flow of $12.4 billion was up from $10.3 billion in the year-ago period.

A bigger spending bill -- and a cheaper stock

So why is the stock falling?

I think the primary reason is because management raised its 2026 capital expenditure forecast to a range of $125 billion to $145 billion, up from a prior forecast for $115 billion to $135 billion.

Showing how extreme this capital expenditure ramp is, the midpoint of the new range is nearly twice the company's $72 billion in capital expenditures last year.

Meta said in its first-quarter update that the higher outlook reflects "higher component pricing this year and, to a lesser extent, additional data center costs to support future year capacity."

Total 2026 expense guidance, however, was left unchanged at $162 billion to $169 billion -- a massive number regardless.

What may be getting lost in the sell-off, however, is just how much flexibility management retains.

"We are going to continue building out our infrastructure with flexibility in mind," Meta chief financial officer Susan Li explained on the company's first-quarter earnings call. "And if we end up not needing as much as we anticipate, we can choose to bring it online more slowly or reduce our spending in future years as we grow into the capacity that we are building now."

In other words, if the returns aren't there, the company can dial it back.

Meanwhile, the stock looks more reasonably priced after the drop, if not a downright bargain.

As of this writing, Meta's price-to-earnings ratio is in the low twenties -- a sensible multiple for a company that just delivered 33% revenue growth.

Of course, Meta faces some significant risks. Its Reality Labs segment, which houses Meta's metaverse hardware and AI glasses, posted an operating loss of about $4 billion in the first quarter alone. And management warned in its first-quarter update that legal headwinds in the EU and U.S. -- including ongoing scrutiny on youth-related issues -- could meaningfully affect future results. Finally, spending of this scale will also weigh on margins as depreciation builds in the years ahead. In fact, we already saw how adjusted earnings grew more slowly than revenue in Q1.

Still, with the underlying business growing sharply and management retaining real optionality on capital allocation, the recent sell-off may be creating an opportunity at a reasonable valuation. With that said, there will likely be continued noise around the company's spending plans. But for long-term investors, I believe that leaning into the fear here could prove rewarding.

Daniel Sparks and his clients have 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.