Meta Platforms Plans Major Investment in AI
Meta Platforms (NASDAQ: META) announced it will raise its capital expenditure (capex) from $72 billion in 2025 to up to $135 billion in 2026, focusing on its “Meta Superintelligence Labs” AI division. This decision follows a reported 22% increase in revenue for the full year, though the company’s free cash flow dropped 16% to $43.6 billion due to significant investments in AI and its augmented reality segment, Reality Labs.
At the end of 2025, Meta served 3.58 billion daily active users across its platforms, representing a 7% increase from the previous year. However, its operating margin fell to 41%, and its earnings per share (EPS) dropped by 2%, impacted by a one-time tax charge. Analysts predict that as capex increases in 2026, free cash flow yield will decline from 3.3% to lower levels, raising concerns among investors about potential effects on the company’s valuations.
While analysts forecast a 20% compound annual growth rate (CAGR) for Meta’s revenue and EPS from 2025 to 2028, the heightened spending could pressure operating margins and advertising revenue amid uncertain macroeconomic conditions. Currently, Meta is valued at 19 times next year’s earnings, reflecting investor caution regarding immediate returns on its significant investments.
