This Is a Troubling Trend Meta Platforms Investors Should Watch Out for in Future Quarters

Meta Platforms (NASDAQ: META) is a big name in social media, with top apps such as Facebook, Messenger, Instagram, and WhatsApp all under its umbrella. Billions of people use one of its applications each and every day. With so many eyeballs on its apps, it's little wonder why the business generates so much revenue, as advertisers see its applications as an easy way to reach a wide range of users.

The company has also been investing heavily in next-gen technologies such as the metaverse and artificial intelligence (AI). And while those may be intriguing growth opportunities, they can also result in significant expenditures. And in recent quarters, the company's expenses have been growing faster than revenue, which could be bad news for the social media stock.

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Meta generated just single-digit earnings growth last quarter

Meta's business has been generating fairly strong, consistent growth in recent years. Its ability to often grow at rates of more than 20% has been impressive, particularly as economic conditions haven't been ideal. In its most recent quarter, which covered the last three months of 2025, Meta's revenue rose by 24% year over year, totaling $59.9 billion. But what may be a sign of trouble is that its costs and expenses rose by a much higher rate of 40%. As a result, its overall operating income increased by just 6%.

Three months earlier, in the September quarter, Meta's revenue growth rate was 26%, and its costs again rose at a higher rate of 32%. The company has been known to invest and spend heavily on new tech opportunities, such as the metaverse, even if the payoff hasn't been clear. And the risk for investors is that as Meta ramps up AI spending, this trend may get worse in future quarters, leading to subpar earnings growth, which may weigh on its share price.

Should you buy Meta Platforms stock on the dip?

This year, shares of Meta Platforms have fallen by around 13%, and the stock is down nearly 30% from its 52-week high of $796.25. Investor sentiment has cooled, and concerns about lawsuits pertaining to social media addiction may weigh on its value even further, as that could inevitably lead to changes in how its apps function and how effective they are for advertisers.

At 24 times its trailing earnings, the stock's valuation is in line with that of the average stock on the S&P 500. However, I wouldn't buy the stock today as there are too many question marks around the business to make it worth the potential headaches. It has enjoyed a terrific rally since 2023, rising by around 380%, and a pullback may be overdue.

David Jagielski, CPA 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.