Meta Platforms (NASDAQ:META) ended Monday's trading session up 2.98% at $600.29, significantly outpacing the Nasdaq Composite's 1.12% gain and the S&P 500's 0.72% rise. The stock traded between $581.76 and $603.58 on volume of approximately 17.06 million shares, near its 65-day average.
The key story for investors, however, goes beyond the one-day bounce. The central question is whether Meta's advertising business or its nascent AI compute leasing strategy will generate returns sufficient to justify a massive capital expenditure program. Consensus data from MarketScreener indicates Meta's capex is projected to surge to roughly $133.4 billion in 2026, up from $69.7 billion in 2025, while free cash flow is expected to turn slightly negative before recovering in 2027.
| Metric | 2025 | 2026E | 2027E |
|---|---|---|---|
| Net Sales | $201.0 bln | $252.9 bln | $302.2 bln |
| CAPEX | $69.7 bln | $133.4 bln | $159.9 bln |
| CAPEX / Sales | 34.7% | 52.7% | 52.9% |
| Free Cash Flow | $43.6 bln | -$0.3 bln | $11.2 bln |
| FCF Margin | 21.7% | -0.1% | 3.7% |
| EPS | $23.49 | $32.86 | $34.97 |
The company's core advertising business remains robust enough to cover a substantial portion of the build. In the first quarter, Meta reported revenue growth of 33% to $56.31 billion, ad impressions up 19%, and average price per ad rising 12%. The company guided second-quarter revenue to a range of $58 billion to $61 billion and raised its 2026 capex outlook, including finance leases, to between $125 billion and $145 billion.
Morgan Stanley strategist Mike Wilson noted that investors may rotate back toward AI hyperscalers after a period of stronger semiconductor gains. In June, Meta, Alphabet (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN), and other hyperscalers sold off while the Philadelphia semiconductor index rose. Wilson called the divergence "likely unsustainable."
Analyst estimates on the payback question vary. Cantor analyst Deepak Mathivanan maintained a buy rating with a $750 price target, stating that "Meta's highest-return opportunity likely remains inside its core advertising business." Morgan Stanley's Brian Nowak, also bullish, favors a smaller "neocloud" approach rather than a full hyperscaler push, modeling that leasing 250 megawatts at $40 per watt could boost 2028 EPS by roughly 8%.
Consensus price targets remain above the current trading level. Benzinga's tracked consensus from 37 analysts stands at $834.49, while StockAnalysis shows a 12-month target of $828.17 from 63 analysts. These imply upside of approximately 39% and 38%, respectively, from Monday's close of $600.29.
However, pushback is growing. Jefferies' Chris Wood warned that heavy AI spending by Microsoft (NASDAQ:MSFT), Meta, Amazon, and Alphabet could lead to "massive capital destruction" if returns do not materialize quickly enough, labeling the risk as "malinvestment."
The broader market provided a tailwind on Monday, with Broadcom (NASDAQ:AVGO) and other chip stocks rising, and technology leading the S&P 500. Jake Dollarhide, CEO of Longbow Asset Management, commented, "If you're not in certain tech names, if you're not in semiconductors, then you're basically missing the entire rally."
Investors will next focus on Meta's earnings report scheduled for July 29. The stock currently trades at roughly 17.76 times forward earnings, as the market weighs that multiple against a 2026 capex plan that could exceed $145 billion under the company's own guidance.
