Meta stock steadies near $590 as AI spending tests investor patience

Meta Platforms shares have fallen 10.6 percent from recent highs as investors weigh heavy AI spending, yet analysts still see 33.1 percent upside.

Meta Platforms shares closed at $589.85 on Aug. 14, down 10.6 percent from recent peaks, as investors punished heavy AI capital spending. The stock, which trades on the Nasdaq under ticker META, carries a market value near $1.5 trillion and sits 26 percent below its 12-month high of $796.25.

"By later next year into 2028, we think you're going to start seeing these companies growing profits and cash flow faster than the incremental capex growth," said Richard Clode, portfolio manager at Janus Henderson's Bankers Investment Trust, which counts Amazon among its biggest overweight positions.

The consensus price target for Meta stands at $785.32, implying 33.1 percent upside from the Aug. 14 close, with a "Moderate Buy" rating and no sell calls in the current tally. The stock has traded between $520.26 and $796.25 over the past 12 months and sits below both its 50-day and 200-day moving averages, a configuration technical commentators read as a consolidation phase.

What hangs over the shares is a landmark US trial in Oakland before Judge Yvonne Gonzalez Rogers, where a coalition of states argues Meta's product design and recommendation algorithms harmed children. Legal filings reference a $1.4 trillion figure tied to the litigation, a number nearly as large as Meta's entire market capitalization, though it frames statutory claims rather than a specific damages estimate.

AI Spending Weighs on Near-Term Returns

Meta reported second-quarter 2026 results that missed some expectations, contributing to share-price volatility as management reaffirmed its commitment to intensive AI infrastructure investment. The company is part of a group of hyperscalers — including Microsoft, Amazon, and Alphabet — that together guided roughly $720 billion to $745 billion of capital spending in 2026, up about 77 percent from the prior year, according to Bank of America data cited by Reuters.

Analysts project hyperscaler capital spending of $1.08 trillion in 2027, more than double the $480 billion consensus from August 2025. Meta trades at 17.6 times forward earnings, the lowest multiple among the major hyperscalers, compared with Microsoft at 24.6 times, according to Reuters. The July selloff in AI-linked stocks, driven by doubts over whether the spending will pay for itself, has left Meta's shares below their post-pandemic peak even as the Philadelphia Semiconductor Index surged 75 percent.

The Bull Case Holds on AI Monetization

Meta's core business — Facebook, Instagram, WhatsApp, and Messenger — reaches billions of users, with advertising as the primary revenue source. The company has refined ad delivery with machine learning and AI to improve relevance, and its AI investments extend to data center infrastructure for training and deploying models at scale.

For investors, the question is whether AI-driven efficiencies and new products can expand earnings and free cash flow enough to justify the current valuation. A 10 percent move in the stock would add or subtract roughly $150 billion from Meta's market cap, a scale that makes the shares a significant driver of the Nasdaq-100 and S&P 500. The next event to watch is the outcome of the Oakland trial, which will shape the regulatory environment for the broader social media industry regardless of the verdict.

This article is for informational purposes only and does not constitute investment advice.