With Metaplatforms(NASDAQ: META) Set to report its first quarter 2026 results on Wednesday, April 29, investors will likely be watching the stock closely.
At one point this year, the tech giant saw its stock price drop sharply as the market digested the company’s combination of impressive revenue growth and eye-popping spending plans. But the stock has rebounded sharply more recently, rising as Meta’s earnings report approaches.
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This backdrop – a strong business with exceptional momentum combined with an intense artificial intelligence (AI) investment cycle – makes Meta an intriguing stock to evaluate.
So is the stock a buy after its recent rally and ahead of its next earnings report?
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Meta’s most recent quarterly update offers a good look at the company’s tension between revenue growth and spending.
Highlighting the company’s impressive business momentum, Meta’s fourth-quarter revenue increased 24% year over year to $59.9 billion. And for the full year 2025, revenue increased an impressive 22% to more than $200 billion.
But profits have come into further question.
Meta’s fourth-quarter net income rose just 9% year over year, far behind its revenue growth, and its earnings per share rose 11% to $8.88. Additionally, fourth-quarter operating income rose just 6% to $24.7 billion.
This gap between rapid revenue growth and slower profit growth reflects the company’s heavy spending as it pursues opportunities in AI. What’s more, this spending pressure is likely to persist through 2026 as the company expects to further increase its investments this year.
The main reason behind the pressure on the company’s earnings, of course, is Meta’s aggressive buildout of AI infrastructure, a headwind that may get even worse this year.
In its fourth-quarter earnings release, the company set its 2026 capital spending guidance at a staggering $115 billion to $135 billion. This represents a dramatic step up from the $72.2 billion the company spent in 2025, signaling a shift toward a much more capital-intensive business model, at least in the short term.
But there is a good reason for this expense. The company believes that AI will create significant opportunities for Meta and is already seeing the fruits of some of its previous investments in computing.
“We are now seeing a significant acceleration of AI,” Meta CEO Mark Zuckerberg told investors during the company’s fourth-quarter earnings call. “I expect 2026 to be a year where this wave accelerates even further on several fronts.”
He later added that the company “will continue to invest significantly in infrastructure to build leading models and deliver personal superintelligence to billions of people and businesses around the world.”
Management noted that it expects 2026 operating income to only be “above” 2025 levels. This cautious guidance suggests Meta’s earnings per share growth may be limited this year as this intense AI investment cycle plays out.
But for investors willing to wait for this big investment cycle to fully pay off, this can still be a good entry point into the stock.
As of this writing, Meta stock is trading at a price-to-earnings ratio of around 29. This isn’t necessarily a cheap valuation, but it doesn’t seem overly expensive either, especially considering the company’s enormous reach of over 3.5 billion daily active users on its apps. In addition, the company is well capitalized and can easily face several years of heavy investments. Meta not only generates significant free cash flow, but also has around $82 billion in cash and marketable securities.
Ultimately, Meta stock looks like an attractive long-term buy, especially if the company can maintain its strong revenue growth and if its significant investments in AI prove to be paying off.
That said, I would keep the position very small.
The risk profile has simply increased due to the change in the business model towards a more capital intensive model. If the economy slows or if these AI investments take longer than expected to generate significant returns, stock valuations leave very little room for error.
Overall, though, I think shares look attractive here, particularly for investors who believe in Zuckerberg’s optimistic vision of building and monetizing an AI superintelligence. But investors should watch the company’s upcoming earnings report closely to see how Meta’s big spending is affecting both its top and bottom lines.
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Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions on and recommends Meta Platforms. The Motley Fool has a disclosure policy.
Meta’s earnings report is coming soon. Is it time to buy growth stocks? was originally published by The Motley Fool
