Meta's Earnings Report Is Coming Up. Is It Time to Buy the Growth Stock?

With Meta Platforms (NASDAQ: META) scheduled to report its first-quarter results for 2026 on Wednesday, April 29, investors are likely taking a close look at the stock.

At one point this year, the tech giant saw its share price pull back sharply as the market digested the company's combination of impressive top-line growth and staggering spending plans. But the stock has recovered sharply more recently, rising as Meta's earnings report approaches.

This backdrop -- a strong business with exceptional momentum combined with a heavy artificial intelligence (AI) investment cycle -- makes Meta an intriguing stock to evaluate.

So, is the stock a buy after its recent run-up and ahead of its upcoming earnings report?

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Strong revenue, pressured profits

Meta's most recent quarterly update provides a good view of the company's tension between revenue growth and spending.

Highlighting the company's impressive business momentum, Meta's fourth-quarter revenue surged 24% year over year to $59.9 billion. And for the full year of 2025, revenue increased an impressive 22% to more than $200 billion.

But profits have been more challenged.

Meta's fourth-quarter net income rose just 9% year over year, significantly trailing its top-line growth -- and its earnings per share increased 11% to $8.88. Further, fourth-quarter operating income rose only 6% to $24.7 billion.

This gap between rapid revenue growth and slower earnings growth reflects the company's big spending as it chases opportunities in AI. Even more, this spending pressure will likely persist throughout 2026, as the company expects to ramp up its investments even more this year.

The AI investment cycle

The main reason behind the company's profit pressure, of course, is Meta's aggressive buildout of AI infrastructure -- a headwind that may get even worse this year.

In its fourth-quarter earnings release, the company set its 2026 capital expenditures guidance at an eye-popping $115 billion to $135 billion. This represents a dramatic step up from the $72.2 billion the company spent in 2025, signaling a shift toward a much more capital-intensive business model -- at least in the near-term.

But there's a good reason for this spending. The company believes AI will create significant opportunities for Meta -- and it's already seeing the fruit of some of its previous investments in computing.

"We are now seeing a major AI acceleration," Meta CEO Mark Zuckerberg explained to investors during the company's fourth-quarter earnings call. "I expect 2026 to be a year where this wave accelerates even further on several fronts."

He later added that the company will "continue to invest very significantly in infrastructure to train leading models and deliver personal superintelligence to billions of people and businesses around the world."

Management noted that it expects 2026 operating income to only be "above" 2025 levels. This cautious guidance suggests that Meta's earnings-per-share growth may be limited this year as this heavy AI investment cycle unfolds.

Is it time to buy?

But for investors willing to wait for this big investment cycle to fully pay off, this may still be a decent entry point into the stock.

As of this writing, Meta shares trade at a price-to-earnings ratio of about 29. This isn't necessarily a cheap valuation, but it doesn't look overly expensive either -- especially when considering the company's enormous reach of over 3.5 billion daily active users across its apps. In addition, the company is well-capitalized and can easily handle several years of heavy investment. Not only does Meta generate significant free cash flow, but it also boasts about $82 billion in cash and marketable securities.

Ultimately, Meta stock looks like an attractive long-term buy, especially if the company can keep up its strong revenue growth and if its substantial investments in AI show that they are paying off.

With that said, I'd keep the position very small.

The risk profile has simply increased given the business model's shift toward a more capital-intensive model. If the economy slows or if these AI investments take longer than expected to generate a meaningful return, the stock's valuation leaves very little room for error.

Overall, however, I think the stock looks attractive here -- particularly for investors who believe in Zuckerberg's optimistic vision for building and monetizing an AI superintelligence. But investors should watch the company's upcoming earnings report closely to see how Meta's big spending is affecting both its revenue and bottom line.

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.