Stock Market Crash: This "Magnificent Seven" Stock Is Firmly in Bargain Territory
Key Points
Meta Platforms stock is down due to worries about its AI spending, with estimated capital expenditures as high as $135 billion in 2026.
The concerns may be overblown, especially since Meta is getting good results from its AI tools.
The company also expects operating income to increase this year.
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Meta Platforms (NASDAQ: META) fell below $600 last Friday, marking a significant decline for a company trading near $800 just six months ago. Part of that is likely due to the macroeconomic environment, but Meta has also worried Wall Street with its artificial intelligence (AI) spending.
The concerns are understandable, but zooming out, there's still a lot to like about Meta as an investment, especially at the current share price.
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The biggest factor weighing down Meta lately is its $115 billion to $135 billion in projected capital expenditures (capex) for 2026. The social media company spent $72 billion in 2025, so costs will significantly increase this year.
Even with its capex spending last year, Meta still reported $43.6 billion in free cash flow, in large part due to the performance gains it's receiving from AI. Meta's AI tools, including its Andromeda ad recommendation system and Llama 4 multimodal model, helped the company grow ad impressions by 12% and average price per ad by 9% in 2025.
Meta CFO Susan Li also said on the Q4 2025 earnings call that 2026 operating income is expected to exceed that of 2025. Meta is profitable enough that it can fund its AI buildout while still growing its income.
Meta trades at 20 times forward earnings as of March 20, making it, by that metric, the cheapest member of the "Magnificent Seven," a group of seven of the largest technology companies. Considering the strength of Meta's business, including a record $201 billion in revenue in 2025, the current share price looks like a great deal.
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Lyle Daly has positions in Meta Platforms. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool has a disclosure policy.
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