Should You Position In Meta Platforms Stock Before 2026?

The Underperformance Puzzle

Meta Platforms (NASDAQ: META) has been a curiosity in 2025. While the S&P 500 has surged roughly 17% this year, Meta’s shares have climbed just 13%, creating a disconnect that puzzles investors given the company’s operational strength. This lag becomes even more puzzling when you examine what the business has actually delivered.

The social media giant—which operates Facebook, Instagram, WhatsApp, and Threads—has maintained consistent momentum in its core advertising business while making transformative bets on artificial intelligence infrastructure. The question investors face heading into 2026 isn’t whether Meta is doing well, but whether its valuation can catch up with its trajectory.

Accelerating Revenue Tells a Compelling Story

The numbers paint a picture of a company hitting its stride. Meta’s second quarter kicked off 2025 with 22% revenue growth, a meaningful jump from the 16% expansion in Q1. The pace didn’t plateau—Q3 pushed growth to 26%, with quarterly revenue exceeding $51 billion.

This expansion came from two distinct drivers working in tandem. Ad impressions across Meta’s platform climbed 14% year-over-year in Q3, while the average price per advertisement increased 10%. This suggests not just volume growth, but pricing power—a sign the company’s AI tools for advertisers are delivering tangible ROI.

Looking ahead, Meta’s guidance for Q4 2025 indicates revenues between $56 billion and $59 billion. The midpoint suggests 19% growth, with the upper range implying 22% growth—a sharp reversal from where the company started the year and a signal that momentum is compounding rather than fading.

The Infrastructure Gamble: Where Real Risk Lives

But here’s where the story gets complicated. Meta is pouring capital into AI infrastructure at a scale that strains even a cash-rich tech giant. For 2025, the company projects capital expenditures (including principal payments on finance leases) between $70 billion and $72 billion.

Then came the kicker: CFO Susan Li announced that 2026 capital expenditure “dollar growth will be notably larger in 2025.” Total expenses should accelerate as well, driven by infrastructure costs, depreciation, and cloud spending.

This spending strategy carries two-edged implications. On the positive side, Meta exited Q3 with $44.5 billion in cash and securities, generating $10.6 billion in free cash flow despite the capex buildup. The company even returned $4.5 billion to shareholders through buybacks and dividends in a single quarter.

On the concerning side, free cash flow will likely compress in 2026 if spending truly does escalate “notably.” The company may need to draw down its cash reserves or reassess capital allocation—a scenario that works fine if AI investments translate to sustained revenue acceleration, but becomes problematic if growth falters.

The Valuation Question With 2026 in Focus

At 29 times earnings, Meta Platforms stock isn’t a screaming bargain. It’s not crushing valuations either. The real question is whether management’s execution on AI infrastructure investments justifies paying this multiple into 2026.

The bull case is straightforward: Meta has a track record of disciplined capital allocation and strong execution. If the company’s massive spending translates into competitive AI advantages that sustain the 20%+ revenue growth rates now evident, a multiple in the upper 20s becomes reasonable rather than stretched.

The bear case hinges on execution risk. Any slowdown in revenue expansion next year—whether from advertising saturation, macro headwinds, or competitive pressure—could trigger rapid multiple compression, since investors would be paying for growth that failed to materialize.

Positioning For 2026

Meta Platforms appears positioned for either a significant rerating upward or a meaningful correction based on 2026 results. The business momentum is real, the AI spending is substantial, and the cash generation capability remains solid even under strain. Yet the risks are equally material: a company paying premium valuations for growth that must accelerate rather than decelerate.

For investors considering a position in Meta stock heading into 2026, the calculus favors exposure, but with appropriate caution. Keep any position sized modestly, remain sensitive to quarterly updates on free cash flow and revenue growth rates, and be prepared to reassess if early-2026 results suggest AI spending isn’t translating into the business impact management projects.