Is Meta Stock Primed for a Comeback in 2026?

Core Insights - Meta Platforms' stock has increased approximately 11% this year but remains down about 20% from its all-time high, while the S&P 500 has risen 17% [1][2] - Investors are speculating on a potential comeback for Meta in 2026, supported by strong quarterly results [2] Financial Performance - In Q3, Meta's revenue grew by 26% year-over-year, reaching $51.2 billion, surpassing management's guidance of $50.5 billion [4] - The increase in revenue is attributed to enhanced user engagement driven by AI-powered recommendations, with users spending 5% more time on Facebook and 10% more on Threads [5] User Engagement - Time spent on Instagram has increased by over 30% since last year, indicating that Meta's platforms are effectively competing against TikTok [6] Capital Expenditure Concerns - Management anticipates capital expenditures (capex) to be significantly higher in 2026, with projections of $66 billion to $72 billion for 2025, compared to $39.2 billion in 2024 [7] - This could lead to over $100 billion in capex for 2026, raising concerns about financial strain [8] Market Sentiment - The market has reacted negatively to Meta's spending plans despite the company's impressive growth for its size and maturity, with shares trading at 21.5 times projected 2026 earnings [9]