Alex Sirois
6 min read
Quick Read
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Meta’s ad business grew revenue 26% to $65B, but a $10B legal settlement crushed reported EPS to $3.83 versus a $5.70 consensus.
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Meta has lagged the S&P 500 over the past year, down 6% while the index gained 10%, yet 55 of 63 analysts rate it a Buy with 40% upside to their average target.
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Meta plans between $135B and $145B in 2026 capex, a level of spending that has already pushed free cash flow negative and driven total costs up 68%, cutting operating margin from 40% to 20%.
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Meta Platforms (NASDAQ:META) trades at $606.73, with a long-term case that extends through 2030. The stock has fallen 16.67% in a month because a legal charge wiped out much of its third-quarter profit, even though revenue grew 26.1%.
Meta owns Facebook, Instagram, WhatsApp, Messenger and Threads, which together reach 3.64 billion daily active people. Advertising brings in about 98% of revenue. Bulls argue Meta is the only tech giant successfully using AI to massively expand its existing core profit engine today.
Revenue came in at $64.60 billion, ahead of estimates. GAAP EPS of $3.83 missed the $5.70 consensus, though, after a $9.89 billion settlement with 52 state attorneys general over teen mental health claims.
AI Is Already Paying Off Inside Meta’s Ad Machine
Without the charge, EPS would have been $7.40. Ad impressions grew 10% and average price per ad rose 14%, which shows AI-driven ranking is raising both volume and pricing.
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The stock trades at 21 times trailing earnings and 18 times forward earnings. Analysts expect EPS to rise from $29.2069 in 2026 to $33.9588 in 2027. Over the past 30 days, 2027 estimates saw 7 upward revisions and 3 downward ones. Muse, Meta’s personal agent, signed up more than 10 million users in about a month and a half. Reality Labs losses should also narrow to about $15 billion in 2027.
