Buy Meta Stock After Strong Q4 Results & CapEx Hike?

Core Insights - Meta Platforms reported strong Q4 results, showcasing significant revenue growth and earnings beat, while providing optimistic guidance for future performance [1][3][9] Financial Performance - Q4 sales reached $59.89 billion, a nearly 24% increase from $48.38 billion in the same quarter last year, surpassing estimates of $58.59 billion by 2% [3] - Q4 EPS was $8.88, up 11% from $8.02 a year ago, beating expectations of $8.21 by 8% [3][4] Capital Expenditures - Meta announced a significant increase in capital expenditures (CapEx), expecting it to be between $115-$135 billion in 2026, up from $72.22 billion last year and more than 200% from $37.26 billion in 2024 [7] - The increase in CapEx is aimed at scaling AI infrastructure, including data centers and the "Meta Superintelligence Labs" [4][6] AI Impact - AI has been a primary contributor to Meta's growth, enhancing ad targeting, driving higher engagement, and strengthening advertiser demand [2][6] - The robust growth in Meta's family of social media apps, higher ad impressions, and improved ad pricing were key factors in the strong Q4 performance [2] Future Guidance - Meta provided positive revenue guidance for Q1 2026, expecting sales between $53.5-$56.5 billion, exceeding Wall Street's expectations of $51.38 billion [9][10] - Year-over-year growth estimates for the upcoming quarters indicate a strong outlook, with anticipated growth rates of 21% for the current quarter and 18.6% for the next quarter [10] Return on Invested Capital (ROIC) - Meta's ROIC stands at 27%, indicating a strong ability to convert invested capital into profits, which is favorable compared to the S&P 500 average of 15% [11] Valuation - Meta is positioned as one of the most attractively priced high-growth tech stocks, with a forward P/E valuation of 22X, which is lower than its peers in the Mag 7 [13] - Despite a high stock price of over $700, the valuation presents a discount compared to other major tech companies [13] Market Position - Following the strong Q4 report, Meta stock holds a Zacks Rank 3 (Hold), with potential for a buy rating due to favorable guidance, valuation, and ROIC [15] - Anticipated EPS revisions for FY26 and FY27 could further catalyze upside in Meta stock, with double-digit growth expected [16]