This $1 Trillion AI Stock Is Getting Ready for 2026: Is Meta a Good Buy? 

TradingKey - Meta Platforms (META) is a family of social apps—Facebook, Instagram, WhatsApp, Threads—that makes up one of the largest digital advertising businesses in the world. The company’s source of revenue is targeted advertising, which is fueled by its extensive first-party user engagement, and increasingly, in-house Artificial Intelligence (AI) models and custom chips. When ads and commerce are factored in, Meta is building a long-term platform — in Augmented Reality and smart glasses — to get us closer to the future of AI. This device hardware business is less profitable than ads right now, but it could grow the company’s ecosystem and open up new ways for it to make money from attention and services in the future.

Performance of Meta Stock in 2025

Meta’s stock gained about 13% in 2025, underperforming the S&P 500’s approximately 17% return. The underperformance is a stark contrast to the business that firmed up through the year. The pace of revenue growth picked up from 16% year over year in the first quarter to 22% in the second quarter and 26% in the third quarter, with revenue in the third quarter exceeding $51 billion.

Management has issued guidance for Q4 revenue to be in the range of $56 billion to $59 billion, implying a strong end to the quarter. Meta's fourth-quarter revenues were $59.89 billion, exceeding the market's expectations.

In the face of this momentum, investors have been turned off by increasing capital expenditures on the AI infrastructure, which have weighed on sentiment and contributed to volatility in the stock.

Advertising revenue was the main contributor to the 2025 numbers. Average price per ad rose 10%, while ad impressions grew 14% year over year in Q3. It is unusual for Meta to increase both impression growth and pricing simultaneously, which suggests that the company is genuinely benefiting from smarter ranking, better targeting, and higher-quality content recommendations.These enhancements are the result of AI investments that are already being implemented within the apps.

Meanwhile, the company also laid out a massive multi-year buildout in AI capacity. The company said capital expenditure in 2026 is estimated to be between $115 billion and $135 billion. “It also points to an expectation for delivering ROI on AI spend, but it also raises the question of FCF in the near term.” Even after the splurge, Meta ended Q3 with more than $44.5 billion in cash and marketable securities; the company generated $10.6 billion in Free Cash Flow in the quarter, and returned capital via $3.2 billion in buybacks and $1.3 billion in dividends. However, if spending rebounds in 2026, cash flow could be squeezed—and go negative, if only briefly—prompting the company to dip into its reserves.

In 2025, this was particularly aligned with Meta’s concurrent smart glasses storyline. The company worked with leading eyewear brands, and sales of its AI glasses grew threefold during the year. Still tiny compared to advertising, this division aligns with Meta’s thesis that AI glasses could become a mainstream interface in the future. Analysis by McKinsey suggests the value of the smart eyewear market will reach in excess of $30 billion in 2030, and Meta wants to be a leader in the space.

Meta vs. the Magnificent Seven: Which Is the Best Bet?

In comparison to other mega-cap peers in the “Magnificent Seven” group — Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG) (GOOGL), Amazon (AMZN), Nvidia (NVDA), and Tesla (TSLA) — Meta combines strong top-line growth with a valuation that still discounts execution risk due to heavy investment. Nvidia receives a premium price as the underlying foundation of AI chips. Both Microsoft and Alphabet have far-reaching, strong and resilient growth; one through ICT and the other through Cloud. Apple's growth has been slower than expected, with its income primarily from sales of hardware and services. Amazon is a reinvestment story; while still cash-flow positive, AWS is generating high levels of revenue and cash flow. Tesla's future is highly-dependent on the cycles of vehicle demand and completion of its autonomous vehicles.

In general terms, Meta’s argument takes two forms at once in that space: its dominant ad platform, which is actually improving—propelled by better AI-based targeting—and its long-term bet on AI-native experiences, including agents and glasses. The question is whether the stock can be rerated on the basis of these investments leading to sustainable revenue and earnings growth rather than on a capacity basis.

Meta’s balance sheet is healthy when compared to most of its counterparts, and it has a gargantuan cash hoard, so there’s nothing in the near term that requires an inflow for its roadmap. The core ad business still is very high-margin and capital-light, which gives the company a little breathing room as it ramps infrastructure spending. A Price-to-Earnings ratio of roughly 29 for the business's stock implies a growth premium; however, it is not as high as that of some other AI champions. Meta’s earnings are expected by Wall Street to grow at an annualized rate close to the high teens for the next three years, and numerous analyst targets suggest there is about 25% to 28% upside to recent trading levels. The one big difference to peers is just how front-loaded Meta’s capital plan is in 2025–2026, which could weigh on reported earnings through higher depreciation and on Free Cash Flow in the near term.

Will Meta’s Stock Price Melt Up in 2026? Should You Buy It Now? 

Three things would need to happen simultaneously for the stock to have a strong 2026. For one thing, the ad business would have to continue to grow at a robust pace, indicating the new targeting and engagement patterns have legs. Second, the firm’s increased capital spending has to manifest itself in clear product and monetization advancements—including improved AI tools for advertisers, growing usage of Meta AI assistants, and sustained momentum for smart glasses. Third, investors need to get a clear sense of the rate of spending beyond 2026 and the way back to stronger Free Cash Flow. If these three prerequisites are in place, the stock could re-rate upward from their present position. It would be reasonable to expect a sideways trading range for shares under pressure from margin constraints, in conjunction with a potential slowdown in growth.

Due to Meta's strong core momentum, fair valuation for growth and limited leverage, it is an attractive proposition for long-term investors with tolerance for volatility. In advertising, the company is continuing to build out its momentum and is also making substantial investments into creating new AI-based revenue streams. Timing is unknown as 2026 appears to be an inflection point for measuring the scope of related spending. For investors wishing to create liquidity via establishing a position, a more modest approach might be prudent, waiting for additional updates regarding ad spend growth, ad adoption, capital intensity as well as developments in Free Cash Flow generation. Assuming Meta can continue to exhibit its recently-strong operating performance and demonstrate a clear return on investment from its AI-related expenditures, it is likely this could provide Meta a long runway through 2026 and possibly beyond.