Meta Platforms shares fell to close Friday at $595.19, trading back under $600 and roughly 25% below the company’s 52-week high of $796.25. The stock is valued at about 22 times earnings, lower than the S&P 500’s roughly 28.5 multiple, as investors focus less on Meta’s ad demand so far and more on how much the company is spending—particularly on the infrastructure buildout expected to support artificial intelligence.
Key takeaways
- Price move: Meta shares closed at $595.19, about 25% below the 52-week high.
- Catalyst: Market attention is centered on Meta’s higher capital expenditure plans and the possibility of further spending increases.
- Operations: First-quarter revenue rose 33% year over year, with ad impressions up and average price per ad also increasing.
- Implication: Investors will look to the upcoming earnings report and guidance to determine whether capex translates into a sustained revenue acceleration.
What drove the move
The immediate valuation gap reflects investor scrutiny of spending rather than weakness in advertising demand. In the first quarter, Meta reported revenue growth of 33% year over year to $56.31 billion, accelerating from 22% growth for all of 2025. The company also detailed strength in advertising metrics, including a 19% rise in ad impressions across its apps and a 12% increase in average price per ad.
Engagement indicators also remained firm. Meta said family daily active people averaged 3.56 billion, up 4%, supporting the view that usage is holding up alongside improving monetization. Taken together, the ad and engagement data runs counter to the idea that investors are discounting the core advertising engine.
Capex is the main pressure point
Instead, the stock’s discount appears tied to the scale and trajectory of Meta’s capital expenditure. The company raised its 2026 capex range to $125 billion to $145 billion in April, and spent $19.84 billion in the first quarter alone—up from the initial range of $115 billion to $135 billion that preceded the increase.
Investors have been watching these capex figures move higher once already and may be pricing in the possibility of another adjustment. While Meta reported first-quarter free cash flow of $12.39 billion and ended the period with $81.18 billion in cash and marketable securities, it left its full-year total expense outlook unchanged at $162 billion to $169 billion. That suggests, for now, the added spending is landing more in the balance sheet than in near-term profitability.
What comes next in earnings
Meta is scheduled to report second-quarter results after the close on Wednesday, July 29. Ahead of that, management guided second-quarter revenue to a range of $58 billion to $61 billion. Compared with $47.52 billion in the same quarter last year, that implies growth of 22% to 28%—a deceleration from the 33% first-quarter pace.
Markets may interpret the guidance in two ways. First, reaching the upper end of the range would reinforce the argument that Meta continues to take share in a growing advertising market while still trading at a valuation multiple below the broader index. Second, any further movement upward in the capex range would likely revive concerns that the payback period for AI-related infrastructure spending is extending—an issue investors have highlighted since the April capex increase.
Investors may also track which components of the ad business are doing the heavy lifting. Historically, average price per ad tends to respond first, and Meta’s first-quarter results showed that increase of 12%. If that pattern continues, it would support the revenue outlook even as ad impression growth matures.
Bigger picture for valuation and expectations
With the stock trading at about 22 times earnings—below the S&P 500’s roughly 28.5 multiple—Meta’s current valuation embeds uncertainty around whether AI infrastructure spending will deliver returns on a timetable investors can underwrite. The company’s recent operating numbers show strong advertising momentum, including revenue growth north of 20% and multiple monetization indicators trending higher.
Still, the market’s reaction underscores that investors are not debating whether Meta can grow revenue; they are debating how much incremental spending is required and when that investment begins to show up in earnings power. With capex already raised and guidance set to be tested in the upcoming quarter, investors will likely focus on both revenue delivery and any signal that spending plans could change again.
Heading into the earnings report, the main items to watch are second-quarter revenue relative to management’s $58 billion to $61 billion outlook, commentary on the capex trajectory for 2026, and whether ad pricing continues to lead the way as it did in the first quarter. Those details should clarify whether the current discount to the broader market multiple is narrowing or whether investors will press for more evidence that AI investment is translating into durable profit growth.
