Meta Platforms (META) stock price experienced a significant pullback in the past month, falling nearly 25% and hitting a valuation low not seen in nearly three years. This market panic, triggered by massive AI spending, has overshadowed the company’s strong fundamental performance and long-term strategic value. At this point, Meta is demonstrating the rare dual characteristics of “high growth and low valuation.”
Setting aside the controversy over AI expenditures, Meta’s third-quarter performance was actually impressive. Revenue reached $51.2 billion, a 26% year-over-year increase, significantly exceeding management’s guidance range of $47.5 to $50.5 billion. The core driver of this growth is the successful application of AI technology in its advertising system.
CEO Mark Zuckerberg pointed out during the earnings call that the AI recommendation system increased time spent on Facebook by 5% and on Threads by 10%. This indicates that AI investments are already yielding tangible returns—by enhancing ad conversion efficiency and user experience, they directly strengthen the company’s core profitability.
In fact, concerns that Meta’s 2026 capital expenditures could exceed $100 billion need to be viewed in the context of the industry. Unlike the Metaverse investments in 2022, this AI infrastructure build-out has a clear business logic. In the cloud computing and AI arms race, investments of tens of billions have become the threshold for tech giants to maintain competitiveness. Moreover, infrastructure like data centers serves multiple purposes; even if AI applications develop slower than expected, they can still function as cloud computing assets. At the same time, Meta’s AI advertising system has proven effective in boosting the efficiency of its core business.
Historical experience shows that Meta’s management has the ability to adjust its strategy promptly. After over-investing in the Metaverse in 2022, the company quickly optimized its spending structure and returned to a path of strong cash flow generation.
After this adjustment, Meta’s price-to-earnings ratio has fallen to around 20 times, near the lower end of its historical valuation range. This level has only been seen during major crises, such as the confidence crisis in 2022. It is worth noting that third-quarter profit metrics were impacted by one-time tax expenses; excluding this factor, the actual valuation is even more attractive. From a long-term perspective, the current valuation level has only occurred a few times in recent years, and each instance presented an excellent buying opportunity.
Recent rumors that Meta plans to purchase billions of dollars worth of AI chips from Alphabet are strategically significant. First, as NVIDIA’s second-largest customer, Meta’s introduction of Alphabet’s TPU chips could weaken supplier pricing power. Second, if Alphabet’s chips offer better performance in specific scenarios, it would directly reduce AI computing costs. This move demonstrates that Meta is advancing its AI strategy with a pragmatic approach, balancing cutting-edge development with cost control.
In short, the market’s overreaction to Meta’s short-term spending has created a rare opportunity for long-term investors. The company’s core advertising business continues to grow, driven by AI. Behind the massive investments lies a clear strategic logic, which, combined with historically low valuation levels, creates an exceptional risk-reward profile. As history has shown, Meta’s most challenging investment moments have often been the best buying opportunities. For investors who can withstand short-term volatility, Meta stock at its current price deserves close attention.
