Meta Stock: Why This 25% Pullback Could Be a Prime Buying Opportunity

TLDR

• Meta shares fell 25% from record highs after revealing plans to spend over $100 billion on AI infrastructure in 2026
• Third quarter revenue reached $51.2 billion, surpassing forecasts and growing 26% year-over-year
• AI improvements boosted Facebook usage by 5% and Threads by 10%, enhancing ad performance
• Stock trades at 20 times earnings, the cheapest valuation in nearly a decade
• Cathie Wood’s ARK Invest purchased $21.4 million in Meta shares during the downturn

Meta stock has been hammered. Shares dropped roughly 25% from their peak. The catalyst? A spending plan that has Wall Street nervous.

Meta Platforms, Inc., META

The company outlined aggressive AI infrastructure investments. For 2026, capital expenditures are expected to surpass $100 billion. That’s up from $39.2 billion in 2024.

Most of this cash is funding data center construction. It’s a massive bet on AI’s future. And investors aren’t sure Meta can make it pay off.

Revenue Growth Tells Different Story

The spending concerns overshadowed strong financial performance. Meta delivered $51.2 billion in third quarter revenue. That crushed the high-end estimate of $50.5 billion.

Revenue jumped 26% compared to last year. The growth is directly tied to AI enhancements. CEO Mark Zuckerberg reported AI recommendations increased Facebook engagement by 5%. Threads saw a 10% boost.

These improvements strengthen Meta’s advertising business. Better targeting means higher conversion rates. More time on platform equals more ad revenue.

Why This Feels Familiar

Meta has walked this path before. In 2022, the company poured money into metaverse projects. Investors lost confidence. The stock tanked.

Then Meta pivoted. Spending got reined in. Cash flow returned. The stock recovered.

This situation mirrors that period. But AI appears more promising than the metaverse. The technology is already delivering measurable results across Meta’s platforms.

Smart Money Buying the Dip

ARK Invest sees opportunity in the decline. Cathie Wood’s firm bought 33,837 Meta shares worth $21.4 million. Wood has repeatedly dismissed concerns about an AI bubble.

At a recent conference, she stated AI transformation will take time for enterprises. But she remains bullish on companies making infrastructure investments.

The purchase signals institutional confidence. ARK is betting Meta’s AI spending will eventually pay dividends.

Valuation Reaches Rare Territory

Meta now trades at approximately 20 times earnings. That’s the cheapest multiple in years. A one-time Q3 tax charge artificially inflated the ratio. Without it, the valuation looks even more attractive.

The stock hasn’t traded this low in nearly a decade. The only exception was the 2022 crash when investor sentiment completely collapsed.

The fundamentals remain solid. Revenue is growing. The advertising business is thriving. AI enhancements are working. And the price is down.

Capital spending will eventually stabilize. When it does, Meta’s cash generation should surge. The timeline remains uncertain. But the opportunity appears real.

Meta closed at $633.61 on November 26. The stock lost $2.61 in the session.

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