After a recent decline, shares of Meta Platforms (NASDAQ: META) are trading at a price-to-earnings (P/E) ratio of approximately 28. Following the company’s fourth-quarter earnings report on January 29, where revenue increased by 24% to $59.9 billion, the stock saw gains but has since dropped about 10%, amid a general market pullback, particularly in tech sectors like software and AI.
Meta’s daily active users grew by 7% year over year to 3.58 billion, and management anticipates a strong start to 2026, forecasting Q1 revenue growth between 26% and 30%, excluding currency impacts. However, heavy investments in AI have led to a significant rise in costs, with operational expenses increasing by 40% year over year. Consequently, the company’s operating margin fell from 48% a year ago to 41%, and while earnings per share grew by 11%, this is less than half the revenue growth rate. Capital expenditures for full-year 2026 are expected to reach between $115 billion and $135 billion.
Investors considering Meta should be cautious due to these substantial investments and the associated risks, especially given the company’s future operating income outlook which implies only a slight increase from 2025.
