Meta analysts have expressed concerns about the company’s massive capital expenditure plan, although most expect the spending to solidify its AI prowess.
- CFO Susan Li stated on the earnings call that capex growth will be notably higher in 2026 and that total expenses will grow at a significantly faster rate.
- Meta disclosed a plan to issue bonds worth up to $30 billion to cover its higher spending.
- For the YTD period, Meta stock has risen nearly 11%, eroding some of the 35% gain it had reached in mid-August.
Meta Platforms, Inc. (META) stock has dropped approximately 14% in the two sessions following the company’s quarterly results, with the weak sentiment stemming from an unexpected tax provision that dented bottom-line results and the higher capital expenditure (Capex) flagged by the company.
The extravagant capex plan weighed more heavily on investors’ minds than the earnings miss. The social media giant called the higher tax provision under President Donald Trump’s tax bill a one-time occurrence and stated that federal cash tax payments would be significantly lower for the remainder of 2025 and future years.
Meta’s stock was among the top five trending equity tickers on Stocktwits by late Sunday as retail traders deliberated the potential offshoots of the higher spending.
Meta Aggressive Among Mag 7s
The Menlo Park, California-based company has guided its 2025 capital expenditures (capex) to $70 billion to $72 billion, raising the low end of the range from the previously forecasted $66 billion. This represented a marked increase from the $39.23 billion spent in 2024. It also flagged total spending of $116 billion to $118 billion.
CFO Susan Li stated on the earnings call that capital expenditures (capex) dollar growth will be notably higher in 2026 and that total expenses will grow at a significantly faster rate. Li attributed the outlook to the set of investments the company is making in its ads and organic engagement initiatives in 2026 to drive revenue growth, as well as the progress it seeks to make with its artificial intelligence (AI) models and products.
A review of rival Magnificent Seven companies’ capital expenditure plans reveals that Meta is the most aggressive. Alphabet’s Google looks to spend $91 to $93 billion in capex this year. While Microsoft did not quantify its capex plans, the company stated that it is increasing spending on GPUs and CPUs to accelerate demand. CFO Amy Hood predicted sequentially higher capex for 2026 and a higher growth rate as well. Deepwater Asset Management’s Gene Munster said he expects Meta’s capital expenditures to rise by 60% in 2026. He expects a 45%-50% increase for Microsoft and a 25% hike for Alphabet.
Munster estimates Apple’s 2026 capital expenditures to be between $12 billion and $14 billion, as the company relies on both first- and third-party capacity. E-commerce giant Amazon, which has a thriving cloud business, predicts $125 billion in capex for 2025 and a higher amount for the following year.
In a filing on Thursday, Meta disclosed plans to issue bonds worth up to $30 billion to cover its higher spending.
Wall Street Analysts Weigh In On Meta’s Extravagance
While noting that the Mark Zuckerberg-led company’s capex and spending estimates for 2025 were both above the consensus estimates, Wedbush analyst Daniel Ives said, “While the ultimate level of investment contemplated this year has increased, we believe the spending has been justified, with the infusion of AI capabilities across the company’s ad stack and content recommendation engines driving tangible results for Meta’s Family of Apps and Reality Labs.”
Truist analyst Youssef Squali, while cutting Meta’s price target to $875 from $900, stated that the company continues to earn the right to invest as long as it delivers faster top-line growth and free cash flow in the near term, according to a summary on The Fly. Meta’s revenue grew 26% year over year to $51.24 billion in the September quarter. It guided fourth-quarter revenue to $56 billion to $59 billion, with the midpoint translating to roughly 19% YoY growth.
RBC Capital Markets highlighted the significant increase in the 2026 opex/capex outlook, as well as an AI product narrative that still screens largely unproven for many investors. The firm lowered its price target for the stock to $810 from $840. On the other hand, Roth Capital said the double-barreled spending on Reality Labs and AI infrastructure creates a “sentiment air-pocket”, but recommended that investors should buy the weakness.
Retail Retains Bullish Bias
On Stocktwits, retail investors remained ‘extremely bullish’ on Meta shares amid the stock turbulence and analysts’ mixed outlook on Meta’s capex plan. The message volume on the stream was also ‘extremely high.’
A bullish user said the “3-Day Rule” is in effect, and Monday is probably the best day to buy before a bounce back.
Another user suggested that the stock decline was an “overreaction” to a transparent tax error. “I’m so bullish. Wall Street [is] stealing shares,” they said.
For the year-to-date period, Meta stock has risen nearly 11%, erasing some of the substantial gains it had recorded in mid-August.
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