3 Numbers to Watch to Know if Meta Platforms' AI Spending Is Paying Off

Mark Zuckerberg, Meta Platforms' (NASDAQ: META) founder and CEO, views artificial intelligence (AI) as a generational opportunity. Therefore, the spending seems to have no upper limit, with $135 billion to $145 billion planned in capital expenditures (capex) in 2026. That number will surely be much higher next year.

The company's operating margin was cut in half to 20% last quarter (Q3 2026 ended Sept. 30), dropping from 40% in the year-ago period. Moreover, the business reported negative free cash flow (FCF) of $2.1 billion during Q3. These trends underscore the need to be more critical of the direction the social media giant is heading as it embarks on what might be a long-term capex spree.

Here are three metrics investors should watch to gauge whether Meta Platforms' AI spending is paying off.

Image source: The Motley Fool.

1. Advertising revenue

Meta's 3.64 billion daily active users lay the foundation for one of the world's most powerful ecosystems. The business has the attention of 44% of the world's population. This setup enables the company to generate substantial digital advertising revenue. That's the first metric to keep tabs on.

So far, AI capabilities are driving better engagement. On the other hand, AI capabilities are helping advertisers run better, higher-return campaigns.

This is showing up in the numbers, although it's impossible to know how much is directly attributable to AI enhancements compared to the trajectory Meta Platforms was already on before this technology penetrated the economy. Ad revenue climbed 25.9% year over year last quarter. That gain was supported by a 10% and 14% growth in impressions and pricing, respectively.

Zuckerberg previously said that if the business delivers on its AI ambitions, advertising will represent a larger share of global GDP. Monetizing social media activity will remain the crown jewel operation. And AI must directly impact the company's ad platform.

2. New products and services

On Sept. 8, Meta Platforms launched its Muse AI agent. It has been a huge hit so far. It counted 10 million users in the U.S. and Canada a month and a half after its release. Perhaps more noteworthy is that 25% of these people use it daily.

Unlike other hyperscalers with massive cloud computing platforms, Meta historically hasn't had an immediate distribution channel to monetize its AI investments. Besides the ad ecosystem mentioned, the company is working on entirely new products and services designed with AI in mind from the start.

The Muse personal agent is one example. Another significant recent launch is Muse Wonder, Meta Platforms' first frontier model. There's also the Meta Enterprise Platform, which offers AI tools to corporate clients.

The question going forward is about monetization. Will these new products and services contribute meaningful revenue within the next five or 10 years? Investors should be watching this closely to gauge the success of Meta Platforms' sizable AI spending.

3. Operating cash flow

Because the company is investing so much in AI, it's critical not to just look at the income statement. I noted that Meta Platforms posted a FCF loss of $2.1 billion in the most recent quarter. This metric focuses attention on the cash flow statement. To get a clearer picture of the true economics, investors need to look here.

Watch operating cash flow (OCF) trends closely. Through the first nine months of 2026, this figure was up 21.7% year over year. In a vacuum, this is a strong gain.

However, it lagged the 72% growth in capex over the same period. Meta Platforms' spending is rising at a faster clip than OCF. As long as this continues, it will continue to burn cash.

The ideal scenario is that OCF eventually outpaces capex, supporting a return to positive FCF. But this might be far off, as the business just announced a plan to raise almost $100 billion in equity capital to fund the AI build-out. Investors will have to be patient for the payoff.

Neil Patel 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.