Shares slid 3.1% to $576.36 Wednesday morning as investors reassessed whether Meta can outrun the biggest spending binge in corporate history during a market rattled by geopolitical turmoil and rising oil prices. The stock is now down around 24% from its 52-week high of $796.25 , and the selloff reflects a sharpening question: is Meta spending its way to dominance or its way into trouble?
The Spending Nearly Doubles — and Eats Almost All the Cash
Meta is projecting 2026 capex of $115–$135 billion, up from $72.2 billion in 2025. To put that in perspective, the high end of the range nearly exhausts Meta's $116 billion in cash flow from operations in 2025 . Long-term debt ended 2025 at $58.7 billion, up sharply , signaling Meta is borrowing heavily to fund an AI infrastructure buildout whose payoff remains years away.
Margins Are Already Shrinking Under the Weight
Operating margin fell to 41% from 48% a year earlier, as costs and expenses rose 40% year over year in Q4.
Full-year 2026 total expenses are guided at $162–$169 billion, with the majority of growth driven by infrastructure costs — cloud computing bills, depreciation on new data centers, and operational overhead. Investors worry this spending spree will compress margins in the near term, especially if returns from new AI products lag.
The Ad Business Is Strong — But Must Be Flawless
Advertising revenue grew 24% in Q4 to nearly $60 billion , and Q1 2026 revenue guidance of $53.5–$56.5 billion topped the $51.3 billion consensus . That's the engine funding everything. But at roughly 24x forward earnings, the stock leaves zero margin for error. Analyst Laura Martin warns even modest shortfalls could trigger 10–15% downside.
The Metaverse Ghost Haunts This Bet
Meta poured billions into the metaverse, and its Reality Labs division incurred losses totaling more than $19 billion last year.
The company has recently been backing away from its metaverse efforts as it pivots toward AI, but it's a reminder that the business hasn't always been careful with its spending. Investors are right to ask: what if AI follows the same script?
The bottom line: Meta's ad business generates enormous cash, but it is now being redeployed at a scale that transforms the company from a lean software operation into a capital-heavy infrastructure builder. The stock has fallen 20% from its August high — and until Q1 results prove the revenue growth can keep pace with the spending, the pressure won't ease.