In the ever-evolving landscape of technology and finance, Meta Platforms, Inc. (NASDAQ: META) has found itself at a critical juncture. The company has reported significant growth in its revenue during 2025, showcasing a robust business momentum. Meta’s second-quarter revenue surged by an impressive 22%, which marked an acceleration from the previous quarter’s 16% growth. This positive trend continued into the third quarter, where revenue increased by 26%, pushing quarterly earnings above $51 billion.
Such growth has been largely attributable to the company’s advertising performance, which saw ad impressions rise by 14% year-over-year. Furthermore, the average price per ad increased by 10%, indicating strong demand for Meta’s advertising services. As the company moves towards wrapping up the year, projections for the fourth quarter suggest that revenue could reach between $56 billion and $59 billion, potentially resulting in growth rates of 19% to 22%. These figures are notably higher than the 16% growth rate that marked the beginning of the year.
However, while the momentum in revenue growth is commendable, Meta also faces considerable risks. The tech giant is heavily investing in artificial intelligence (AI) infrastructure, with projected capital expenditures for 2025 expected to be between $70 billion and $72 billion. This considerable investment raises concerns about the sustainability of cash flow, as the anticipated costs for 2026 are expected to be even greater. CFO Susan Li has indicated that capital expenditures will increase significantly, driven by higher infrastructure costs.
Despite these risks, there are encouraging signs. Meta ended the third quarter with approximately $44.5 billion in cash and marketable securities and generated $10.6 billion in free cash flow during the same period. Furthermore, the company managed to return capital to shareholders through share repurchases and dividends, totaling around $4.5 billion.
Given this combination of strong financial performance and significant investment in future growth, the question arises: Is Meta stock a buy as we approach 2026? With a price-to-earnings ratio of 29, it might not be considered cheap; however, it also does not appear excessively overpriced. The key to Meta’s stock performance will hinge on whether its substantial investments in AI can support continued revenue growth in the coming year.
Investors should approach Meta with caution, considering the inherent risks associated with the company’s aggressive spending on AI. Maintaining a small position in the stock might be prudent, as any indication that Meta’s investments do not yield the expected results could necessitate a reevaluation of the stock’s potential.
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