With Meta Platforms (NASDAQ: META) is scheduled to report its first quarter 2026 results on Wednesday, April 29, investors may be keeping a close eye on the stock.
At one point this year, the tech giant saw its share price take a sharp dive as the market digested the company’s combination of impressive top-line growth and dramatic spending plans. But the stock has recovered sharply recently, rising as the Meta report approaches.
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This background — a strong business with unique momentum combined with an artificial intelligence (AI)-heavy investment cycle — makes Meta an interesting stock to explore.
So, is the stock a buy after its recent launch and before its upcoming earnings report?
Meta’s most recent quarterly update provides a good overview of the company’s disparity between revenue growth and spending.
Highlighting impressive business momentum, Meta’s fourth-quarter revenue increased 24% year over year to $59.9 billion. And for the full year of 2025, revenue increased by 22% to more than $200 billion.
But profit has been a big challenge.
Meta’s fourth-quarter revenue was up just 9% year-over-year, significantly trailing its top-line growth — and earnings per share rose 11% to $8.88. In addition, fourth quarter operating income increased 6% to $24.7 billion.
This gap between fast revenue growth and slow earnings growth reflects the company’s heavy spending as it pursues opportunities in AI. Moreover, this spending pressure will persist in 2026, as the company expects to increase its investment even more this year.
The main reason for the company’s profit pressure is, of course, Meta’s aggressive build-out of AI infrastructure — a storm that could only get worse this year.
In its fourth-quarter earnings release, the company set its 2026 capital expenditure guidance at a staggering $115 billion to $135 billion. This represents a dramatic jump from the $72.2 billion the company spent in 2025, signaling a shift to a more capital-intensive business — at least in the near term.
But there is a good reason for this spending. The company believes AI will create significant opportunities for Meta — and is already seeing the fruits of some of its previous investments in computing.
“Now we’re seeing a massive acceleration of AI,” Meta CEO Mark Zuckerberg explained to investors during the company’s fourth-quarter earnings call. “I expect 2026 to be the year when this wave will accelerate in many areas.”
He later added that the company “will continue to invest heavily in infrastructure to train the best models and bring personal intelligence to billions of people and businesses around the world.”
Management noted that they expect 2026 operating income to be “in excess” of 2025 levels only. This cautious guidance suggests that Meta’s earnings per share growth may be limited this year as this heavy AI investment cycle unfolds.
But for investors willing to wait for this big investment cycle to pay off in full, this could still be a decent place to get into the stock.
As of this writing, Meta shares trade at a price-to-earnings ratio of about 29. This isn’t exactly a cheap valuation, but it doesn’t look too expensive — especially considering the company’s massive reach of more than 3.5 billion daily active users across all of its apps. In addition, the company has a lot of capital and can easily manage several years of heavy investment. Not only does Meta generate significant free cash flow, but it also boasts $82 billion in cash and marketable securities.
Ultimately, Meta stock looks like an attractive long-term buy, especially if the company can continue its strong revenue growth and if its big investment in AI shows it’s paying off.
For that, I will keep the position very small.
The risk profile just increases if the business model changes to a capital intensive model. If the economy slows down or if these AI investments take longer than expected to generate meaningful returns, stock valuations leave very little room for error.
Overall, though, I think the stock looks attractive here — especially for investors who believe in Zuckerberg’s vision of the prospect of building and monetizing AI intelligence. But investors should watch the company’s earnings reports closely to see how Meta’s big spending is affecting its revenue and bottom line.
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Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool ranks and recommends Meta Platforms. The Motley Fool has a policy of disclosure.
Meta Earnings Report Coming. Is It Time to Buy a Growth Stock? was first published by The Motley Fool
