Meta Platforms (META): Reassessing Valuation After Q3 Growth and $30B AI Investment Push

Meta Platforms (META) drew fresh attention from investors this week as it announced record capital spending plans to advance its AI infrastructure, funding the effort with a $30 billion bond sale. Strong third-quarter growth and international revenue momentum have kept the spotlight on Meta’s evolving strategy.

See our latest analysis for Meta Platforms.

Meta’s bold AI investment push has been met with a sharp share price pullback, down 18.7% over the last three months and off 16.5% just this past week as investors weigh the risks of surging capital expenditures against long-term growth. Still, Meta’s one-year total shareholder return stands at nearly 10% and its blockbuster 554% return over three years speaks to the company’s powerful momentum even through volatility.

If Meta’s dramatic shifts have you curious about what else is moving in tech and AI, explore the landscape with our curated list: See the full list for free.

With shares selling off following Meta’s ambitious AI spending plans, the debate is heating up. Is the stock’s recent pullback an attractive entry point, or are all the future gains already reflected in the price?

Most Popular Narrative: 26.1% Undervalued

With Meta Platforms’ narrative fair value set at $848, there is a substantial gap compared to the last closing price of $627.32. This suggests significant upside if narrative assumptions play out. The stage is set for a closer look at what could fuel this valuation, especially given the company’s current position at the forefront of digital advertising innovation.

Advances in AI-driven ad targeting and content delivery are significantly improving ad performance and personalization, with Meta reporting material increases in ad conversions (for example, 5% more on Instagram, 3% on Facebook) and advertiser ROI, suggesting the company's ongoing investments will further boost revenue growth and operating leverage over the long term.

Read the complete narrative.

Want a peek inside the engine behind this rich valuation? The narrative relies on bold projections for both future earnings and profit margins. It is the kind of forecast that only a select few companies in tech can even contemplate. Intrigued by the pivotal factors that make this valuation tick? The full story reveals what really moves the needle for Meta’s future market value.

Result: Fair Value of $848 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, surging AI-related investment costs and ongoing regulatory uncertainty could still test Meta’s ambitious narrative and impact its long-term growth expectations.

Story Continues

Find out about the key risks to this Meta Platforms narrative.

Build Your Own Meta Platforms Narrative

If you’d like to reach your own conclusions or think a different story could unfold, you can build your own Meta Platforms narrative in just a few minutes. Do it your way

A great starting point for your Meta Platforms research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include META.

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