Meta stock surged after strong earnings, but massive AI spending and legal risks raise valuation questions. Here’s what investors need to know now.
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| Meta’s Valuation Needs a Reality Check: Strong Earnings, Big AI Bets, and What Comes Next |
What Is Happening With Meta Stock?
Meta Platforms, Inc. (META) delivered a powerful earnings report for Q4 and full-year 2025, beating Wall Street expectations on both revenue and earnings per share. The market initially reacted positively, sending Meta stock up nearly 7%, from around $669 to $716 per share.
However, despite the strong numbers, many investors believe Meta’s valuation needs a reality check, especially given the company’s escalating artificial intelligence spending and rising legal risks.
This disconnect between performance and perception has created debate—and opportunity.
Why Are Investors Questioning Meta’s Valuation?
The concern isn’t Meta’s core business. Advertising revenue surged 24% year-over-year, and Meta continues to dominate global digital advertising through Facebook, Instagram, and WhatsApp.
The hesitation comes from macro-level fears around AI spending. Meta plans to invest $115–$135 billion in CapEx for 2026, largely to support Meta Superintelligence Labs, its push to compete with AI leaders like OpenAI and Google.
At the same time, Meta faces ongoing legal risks, including child safety lawsuits and FTC antitrust appeals. While none threaten Meta’s survival, they add uncertainty that investors can’t ignore.
When Did Meta Report These Results?
Meta reported its Q4 and FY 2025 earnings on January 28, 2026. The results showed:
Q4 revenue: $59.89 billion (2.43% above estimates)
Q4 EPS: $8.88 (8.6% beat)
FY 2025 revenue: $200.97 billion
FY 2025 EPS: $29.68
Despite these strong figures, Meta’s one-year stock performance remains relatively flat, weighed down by AI spending concerns rather than weakening fundamentals.
Where Is Meta Investing for Future Growth?
Meta is doubling down on two key areas:
Artificial Intelligence
Heavy investment in compute infrastructure and Superintelligence Labs to scale advanced AI models.Wearables & Hardware
A strategic shift from VR toward Ray-Ban smart glasses and wearables, which Meta CEO Mark Zuckerberg sees as the future of consumer AI interaction.
Reality Labs revenue remains modest, but losses appear to be stabilizing—a positive sign after years of heavy cash burn.
How Should Long-Term Investors and Traders React?
For long-term investors, Meta’s current valuation may represent a rare discount in a company with strong cash flow, dominant market share, and accelerating revenue growth. With over $81 billion in liquid assets, Meta has the financial firepower to absorb AI investment risks.
For active traders, volatility around meta earnings creates opportunities—especially when paired with smart risk management and AI-powered tools.
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