Meta has shifted its capital spending to focus heavily on artificial intelligence, allocating a total of $135 billion for AI infrastructure in 2026. This investment underpins the company’s ad platform enhancements, with AI-driven improvements boosting average ad pricing by 6% year-over-year and driving a 10% increase in advertising efficacy. Meta’s data center expansion is targeted to support both training and inference workloads, enabling real-time personalization across Facebook, Instagram and Reels without waiting on third-party suppliers. As a result, management projects that every dollar spent on AI now flows directly into near-term monetization, accelerating the company’s transition from pure capex cycle to an AI profit cycle.

In its fourth quarter, Meta reported revenue growth of 24% year-over-year to $59.9 billion, with ad impressions rising 18% and Reels watch time surging over 30%. The core digital advertising business contributed $58.1 billion in sales, up 24% from the prior year, reflecting strong demand across North America and EMEA markets. For the first quarter of fiscal 2026, Meta guided to revenue growth of 29.9% year-over-year, driven by continued ad monetization cadence and the launch of new AI-powered creative tools. The company also disclosed a $56 billion revenue backlog from multi-year advertising commitments, positioning it to convert deferred bookings into cash flow over the next two years.

Following a 21.6% recovery in the past six months, Meta was downgraded from Strong Buy to Buy by a leading research firm, which nevertheless raised its capital appreciation target to $976 per share on the thesis of cheap relative valuations. At current multiples—below the S&P 500 average and trading at a discount to its historical high—analysts see upside potential of more than 30%. The convergence of accelerated AI monetization, stable free cash flow generation, and disciplined expense management underpins the consensus Buy rating among the Street’s 25 coverage analysts.