NEW YORK, Jan 20, 2026, 05:58 EST
- Before the U.S. market open, Meta shares traded close to $620, with investors zeroing in on the expenses tied to its AI expansion.
- New investor notes highlighted doubts about the timeline for heavy spending to translate into profit, pointing out Reality Labs remains a drag.
- Meta plans to release its fourth-quarter and full-year 2025 earnings on Jan. 28.
Meta Platforms shares hovered around $620 in early trading Tuesday, marking a drop of roughly 20% from recent peaks as investors debated the returns on its AI infrastructure investments.
The debate comes right before Meta’s upcoming earnings report, where investors will likely probe the pace of its spending and the specifics behind it. Meta plans to announce its fourth-quarter and full-year 2025 results after markets close on Jan. 28. (Meta)
Meta’s guidance hasn’t eased worries much. In prepared comments for its latest quarterly report, CFO Susan Li projected 2025 capital expenditures—covering long-term investments like data centers and servers—between $70 billion and $72 billion. She also noted that “capex dollar growth will be notably larger in 2026 than 2025.” (Meta)
Seeking Alpha contributor Motti Sapir held a “Hold” rating in a note early Tuesday, saying the current valuation “reflects balanced risk and reward” after the recent pullback. He set fair value between $638 and $700 if the AI bets pay off, but warned of a downside range near $550 to $570 should ad growth slow or new projects falter. Reality Labs remains a drag on profits, Sapir added. (Seeking Alpha)
Nasdaq ran a separate column on Sunday offering a more upbeat take, highlighting Meta’s massive user base and strong cash flow as buffers for its AI investments. It noted the company’s 3.54 billion daily active users across its apps and referenced management’s remarks about AI boosting engagement and enhancing ad tools. (Nasdaq)
Spending has also become a blunt talking point in the market. CNBC’s Jim Cramer pointed out that Meta’s stock was “very down” because the company stands out as a “lone wolf when it comes to spending,” Insider Monkey reported. The write-up highlighted Meta’s recent hike in its 2025 capex guidance during its last quarterly update. (Insidermonkey)
Meta isn’t the only one dealing with investor scrutiny over AI spending. Alphabet, Microsoft, and Amazon are also sinking big cash into data centers and chips. Investors have grown increasingly wary about when those rising costs will start paying off in revenue.
The downside for Meta is straightforward: costs hit before the gains arrive. If ad demand slows, AI products don’t generate much revenue, or Reality Labs continues to burn cash, that spending surge could tighten margins and weigh on the stock.
For now, investors face a waiting game focused squarely on the numbers: capex plans, ad pricing and volume, and whether new AI features can start generating real revenue instead of just burning cash.
