Meta is down 17% in a year even though sales grew 26% last quarter. A new stock sale of up to $97.5 billion and big legal bills are weighing on the shares. Our AI leans Buy, with patience required. Here's why, and what would prove it wrong.
What Meta actually does
Meta sells ads across Facebook, Instagram, and WhatsApp. It reaches about 3.6 billion people every single day, and that network is very hard to copy. Third-quarter sales were $64.6 billion, up 26% from a year ago.
It is also spending heavily on AI. Meta's 2026 capital spending (capex) is guided to $135 to $145 billion, mostly for the AI buildout.
Growth: revenue and earnings
Revenue grew from $117 billion in 2022 to $201 billion in 2025. Over the last twelve months (TTM) it reached about $242 billion.
Revenue ($B, TTM = last 12 months)
Profits are strong too. Net income over the last twelve months is about $75 billion, a net margin of 31.1%. Two items distort the picture: 2025 profit includes a one-time tax charge of about $16 billion, and the third quarter was hit by a $10 billion legal charge.
Net income ($B)
Is it actually cheap?
Price
$620
Market cap
$1.59T
52-week high
$780
P/E (TTM)
21.2
A P/E of 21.2 is fair for a business growing sales 26% a year. It is not a bargain, but it is far from the stretched multiples of other big AI-era winners.
Analysts' average target is about $847, well above today's $620. Over ten years the stock is up about 370%, roughly 17% a year, price only (approximate). The stock peaked near $778 (close) earlier this year and has fallen back.
Moat and leadership
We rate the moat wide. Few companies can reach billions of people daily, and that audience is what advertisers pay for. Leadership is mixed: the core business runs well, but heavy AI spending, negative free cash flow, and mounting legal costs raise real questions about capital discipline.
The risk that flips the call
The risks are real. Capex is heading to $135 billion or more, free cash flow turned negative, and the new stock sale dilutes existing owners. Legal bills are also piling up. The risk to our BUY lean is that the AI spending fails to pay off, or that legal and regulatory costs keep growing.
The AI verdict
AI lean
Wide moat, 26% growth, fair price, heavy risks
BUY
Weighing moat (wide), leadership (mixed), and growth (strong) against the price, our AI leans Buy. The core business is strong and about 21 times earnings is fair for that growth. Patience is required, and the risks are heavy, so weigh both sides.
More in this series: Alphabet, Amazon, Caterpillar, and Eli Lilly. And for the AI side, our free AI Explained course covers what AI is and where it can go wrong.
NOT FINANCIAL ADVICE. This is an AI-generated opinion for education and entertainment only. It is not a recommendation to buy or sell any security. AI can be wrong, and data may be out of date. Do your own research or talk to a licensed advisor before investing.
Sources
- SEC EDGAR: Meta filings — Q3 2026 results, revenue, and net income
- Apple Stocks app: one-year price history, P/E, and market cap (no public link)
- StockAnalysis — P/E, market cap, and analyst target
- Fortune — reporting on the stock sale and legal costs
- Business Recorder — reporting on the stock sale
- Digrin — 10-year return