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Meta continues to spend massive amounts of money on AI-related capital expenditures.
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The company is already leveraging AI to boost engagement and improve ad capabilities.
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A reasonable starting valuation, coupled with solid earnings growth, will drive shares higher.
Investors who bought Meta Platforms (NASDAQ: META) in the early days don’t have much to complain about. Since the company’s initial public offering (IPO) in 2012, its shares have rocketed 1,520% higher (as of Jan. 14). This performance is well ahead of the S&P 500 index.
Meta is no longer a scrappy start-up. It sports an impressive market cap of $1.6 trillion. Could this “Magnificent Seven” stock help you retire a millionaire?
Meta isn’t shying away from spending money on artificial intelligence (AI). It allocated $39 billion on capital expenditures (capex) in 2024, which is estimated to bump up to $71 billion (at the midpoint) last year. And the “current expectation is that capex dollar growth will be notably larger in 2026 than 2025,” according to CFO Susan Li. These are massive sums of money meant to bolster Meta’s technical infrastructure. And these outlays indicate the firm belief founder and CEO Mark Zuckerberg has in the potential of AI.
Not many companies are in such an advantageous position as Meta. It’s already a dominant force in the tech world. In the third quarter (ended Sept. 30), it had 3.54 billion daily active users across its social media platforms (Facebook, Instagram, WhatsApp, Messenger, and Threads), giving it unmatched reach across the globe.
And Meta rakes in extraordinary amounts of profits, totaling $37.7 billion in net income on $141.1 billion of revenue in the first nine months of 2025. This translates to sizable free cash flows, which allow the business to pay so much on AI-related capex. Of course, investors will want to see an adequate return on this capital. This is the big question that will take time to answer.
So far, Meta appears to be thriving in the AI age, though. Management mentioned on the Q3 2025 earnings call that AI is boosting engagement on its apps.
Advertising customers are the other critical stakeholder group Meta must focus on. The business collected $50 billion in ad revenue in Q3, accounting for 98% of its total. Meta’s Advantage+ AI tools are lowering costs for these customers.
Zuckerberg previously said that if the company can improve its AI ad capabilities, then advertising will become a larger share of global GDP. This is a bold statement that I think might have gotten overlooked. However, it could foreshadow a tremendous opportunity that one of the most visionary CEOs sees in front of us.
