Is Meta Stock a Buy After Its AI Spending Spree?

Core Insights - Meta Platforms is focusing on significant investments in artificial intelligence (AI) infrastructure, with projected capital expenditures for fiscal 2025 between $70 billion and $72 billion, an increase from the previous estimate of $66 billion to $72 billion, and substantially higher than the $39.2 billion in fiscal 2024 [2] - Despite high spending, Meta is considered a viable option for long-term investors with a high risk tolerance due to its robust financial performance and future monetization potential of AI products and services [3][4] - The company is leveraging AI in various applications, which could lead to improved user engagement and ad conversion rates, positively impacting revenue and profitability over the coming years [6][7] Financial Performance - In Q3 of fiscal 2025, Meta's revenue increased by 26% year-over-year to $51.2 billion, while operating income rose by 18% year-over-year to $20.5 billion [4] - However, net income saw a significant decline of 83% year-over-year, attributed to increased one-time, noncash tax payments following the implementation of the One Big Beautiful Bill Act [4] Market Position - Meta's stock trades at approximately 25 times forward earnings, which is the lowest among the "Magnificent Seven" stocks, suggesting a reasonable valuation in light of its AI-driven growth potential [9] - The company has a vast user base, with over 3.5 billion people using its applications daily, enhancing the impact of improvements in AI capabilities [7]