Over the past 12 months, Meta Platforms has delivered a total shareholder return of just 4%, lagging the broader market despite continued strength in user engagement and advertising demand. This relative weakness reflects investor skepticism about the company’s ability to monetize its AI investments without a standalone cloud offering and concerns over heavy capital expenditures, which have compressed near-term free cash flow. That underperformance, however, has driven Meta’s valuation multiple well below historical averages for high-growth digital platforms, creating what many analysts view as an attractive entry point for long-term investors.

Meta plans to invest approximately $70–72 billion in capital expenditures in 2025, up nearly 25% year-over-year, to expand data centers, build AI training clusters and support Reality Labs development. While this spending will weigh on free cash flow in the next 2–3 quarters—guidance suggests FCF could compress by up to 30% sequentially in Q1 2026—it underpins the company’s strategic pivot toward AI-driven services and infrastructure. Management has secured long-term renewable power purchase agreements across the U.S. and Europe to ensure cost-efficient power for its data centers, further strengthening the AI roadmap.

Meta currently employs over 30,000 AI specialists across research and product teams, making it one of the largest private-sector AI talent pools globally. The company’s proprietary AI models power key features across Facebook, Instagram and WhatsApp, and internal benchmarks indicate performance on par with or exceeding competing large-language models in vision and recommendation tasks. Strategic partnerships with leading chipmakers and cloud providers enable Meta to custom-design AI accelerators for its internal workloads, rather than rely solely on third-party GPUs, laying the foundation for both cost control and differentiated product offerings.

In the core advertising business, Meta is leveraging AI to boost both ad targeting precision and yield. In Q1 2025, more than 50% of all Instagram ad impressions were served within Reels formats—up from 35% a year earlier—demonstrating strong advertiser demand for immersive, AI-enhanced short-form video inventory. Average price per ad increased by 10% year-over-year in Q3 2025, while total ad impressions grew by 14%, resulting in 26% top-line growth for the quarter. Wall Street consensus forecasts call for Q4 revenue of $58.3 billion (up 20.6% year-over-year) and EPS of $8.19 (up 2.1%), underscoring expectations that AI-driven ad products will continue to fuel core digital advertising expansion.