META Down 19% From 52-Week High: What Awaits the Stock in 2026?

Meta Platforms’ META shares closed at $644.23 on Dec. 12, down roughly 19.1% from the 52-week high of $796.25 it hit on Aug. 15. META shares have returned a meager 3.2% in the trailing 12-month period, underperforming the broader Zacks Computer & Technology sector’s appreciation of 20.4%. In the past six months, META shares have dropped roughly 8% and is expected to decline further, reflecting lower earnings expectations in the near term due to high capital expenditure. So, how should investors approach META stock as we come close to drawing a curtain on 2025 and enter 2026? Let’s find out.Huge AI Spending: Will it Boost META’s 2026 Prospects?Meta Platforms is spending heavily on AI research, models, and infrastructure, as well as future products from Reality Labs. The company now expects 2025 capital spending between $70 billion and $72 billion compared with the previous guidance of $66-$72 billion range. Per CNBC, Alphabet GOOGL, Meta Platforms, Amazon AMZN and Microsoft on a combined basis are expected to spend roughly $380 billion on developing AI infrastructure in 2025. For 2026, META expects significant growth in capital expenditure in dollar terms compared with 2025. Growth in operating expenses is expected to be substantial due to higher infrastructure costs and employee compensation costs.Although these investments are expected to boost META’s prospects over the long term, a challenging macroeconomic environment, growing fears of an AI bubble, regulatory issues (in the European Union and the United States) and stiff competition in ad market from the likes of Alphabet, Amazon, Snap SNAP, TikTok among others is expected to drag down META’s share price in the near term.META Stock’s One-Year Performance Image Source: Zacks Investment Research In the trailing 12 months, META shares have outperformed Amazon and Snap but lagged Alphabet. Shares of Alphabet have appreciated 57.2% while Amazon and Snap shares have declined 2.9% and 35.6%, respectively.META’s AI Integration Boosts User & Advertiser EngagementsMeta Platforms, along with Alphabet and Amazon, are expected to absorb more than 50% of the projected global ad spending this year and 56.2% in 2026. META’s focus on integrating AI into its platforms — Facebook, WhatsApp, Instagram, Messenger and Threads — is driving user as well as advertising engagements. AI is heavily dependent on data, of which META has a trove, driven by its more than 3.54 billion daily users, including 3 billion monthly actives on Instagram and 150 million daily actives on Threads. Time spent across platforms is expected to benefit from Meta Platforms’ continuous ranking optimizations. AI recommendations that deliver higher quality and more relevant content are expected to drive engagement. Vibes, META’s next-generation AI creation tools and content experience, is gaining traction. The company is using Meta AI (currently used by more than one billion people) to boost user experience. Business AI is also gaining traction with more than one billion active threads between people and businesses across its messaging platforms.The ad business is benefiting from an improved AI ranking system. Annual run rate for META’s complete end-to-end AI-powered ad tools has passed $60 billion. In the third quarter of 2025, the average price per ad increased 10% year over year, benefiting from increased advertiser demand, largely driven by improved ad performance. The company has a strong pipeline of ad supply opportunities on both Threads and WhatsApp Status over the long term. Ads are now running globally in Feed on Threads, and META plans to optimize the ad formats and performance before increasing supply. META’s Advantage+ creative suite is gaining traction, with the number of advertisers using at least one of its video generation features going up 20% on a sequential basis as adoption of image animation and video expansion continues to scale. The addition of more generative AI features is making it easier for advertisers to optimize their ad creatives and drive increased performance. Meta Platforms introduced AI-generated music for advertisers in the third quarter of 2025.META’s Earnings Estimate Revision Shows Downward TrendThe Zacks Consensus Estimate for fourth-quarter 2025 earnings is pegged at $8.15 per share, down by a penny over the past 30 days, suggesting 1.62% growth from the figure reported in the year-ago quarter.  Meta Platforms, Inc. Price and Consensus Meta Platforms, Inc. price-consensus-chart | Meta Platforms, Inc. Quote Meta Platforms expects fourth-quarter 2025 total revenues to be in the range of $56-59 billion. The consensus mark for fourth-quarter 2025 revenues is pegged at $58.37 billion, indicating 20.63% growth from the figure reported in the year-ago quarter.The Zacks Consensus Estimate for 2025 earnings is pegged at $23.43 per share, down by 2.7% over the past 30 days, suggesting a 1.8% decline from the figure reported in 2024. The consensus mark for 2025 revenues is pegged at $198.75 billion, suggesting 20.8% growth over 2024.META Shares Trade at a PremiumMETA shares are overvalued, as suggested by the Value Score of C. In terms of the forward 12-month price/sales (P/S), META is trading at 7X, a premium compared with the Zacks Internet Software industry’s 4.82X, Amazon’s 3.06X, and Snap’s 1.88X.META Valuation Image Source: Zacks Investment Research ConclusionMeta Platforms is spending heavily on expanding AI infrastructure, which, along with the company’s heavy usage of AI across its platforms, is expected to boost user engagement, driving top-line growth over the long term. However, aggressive spending is hurting earnings prospects in the near term. This, along with stiff competition in the ad market and a stretched valuation, is a headwind for prospective investors.META currently has a Zacks Rank #3 (Hold), which implies that investors should wait for a more favorable entry point to accumulate the stock. 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(AMZN): Free Stock Analysis Report Alphabet Inc. (GOOGL): Free Stock Analysis Report Snap Inc. (SNAP): Free Stock Analysis Report Meta Platforms, Inc. (META): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks