Should You Buy Meta Platforms Stock Before 2026? Assessing AI-Driven Growth Versus Valuation Concerns

In the race to dominate the artificial intelligence (AI) landscape, Meta Platforms (NASDAQ: META) has positioned itself as both a disruptor and a work-in-progress. With a staggering $19.4 billion in AI infrastructure spending in Q3 2025 alone and a full-year projection of $70–$72 billion, the company is betting heavily on its transformation into a "frontier AI company". Yet, as investors weigh the allure of Meta's AI ambitions against its current valuation metrics, the question remains: Is the stock a compelling buy before 2026?

AI-Driven Growth: Strategic Investments and Product Ecosystem

Meta's AI strategy is no longer confined to the realm of speculative innovation. The company has embedded AI into its core operations, from optimizing ad performance to enhancing user engagement. For instance, AI-powered ad tools like Advantage+ and the Generative Ads Model (GEM) have already generated over $60 billion in annualized revenue, boosting ad conversions by nearly 3% through its Lattice architecture. These tools are not just incremental improvements-they represent a fundamental shift in how Meta monetizes its 3.5 billion daily users.

Beyond software, Meta is expanding its hardware footprint with AI-integrated products. The Ray-Ban Meta Display and Oakley Meta Vanguards, for example, have seen strong initial demand, signaling a pivot toward wearable AI devices. Meanwhile, strategic acquisitions like Rivos, a microchip startup, underscore Meta's intent to control its semiconductor destiny, reducing reliance on third-party suppliers.

The company's infrastructure investments further solidify its AI ambitions. A $65 billion global data center expansion in Q3 2025, coupled with a $14.2 billion partnership with CoreWeave, highlights Meta's commitment to scaling compute capacity. CEO Mark Zuckerberg has framed these moves as essential to building "personal superintelligence", a vision that could redefine user interactions across Meta's platforms.

Valuation Metrics: Assessing the Numbers

Despite these aggressive investments, Meta's stock valuation appears to reflect a degree of caution. As of November 2025, the P/E ratio stands at 28.47, below the estimated fair ratio of 37.1x. A discounted cash flow (DCF) analysis from late 2025 suggests an intrinsic value of around $841 per share, implying the stock is trading at a 21.9–23.4% discount. Analysts have echoed this sentiment, with 41 of them issuing a "Buy" rating, including 51% "Strong Buy" recommendations. The average price target of 826.68 and a median target of $845.00 further suggest optimism about Meta's long-term potential.

However, the numbers tell a nuanced story. While Q3 2025 revenue hit $51.24 billion-a 26% year-over-year increase-Meta's Reality Labs segment, which includes its metaverse and AI hardware initiatives, reported a $3.7 billion operating loss during the same period. This highlights the tension between near-term profitability and long-term bets on AI and metaverse infrastructure. Analysts have flagged execution risks, including regulatory scrutiny, high capital expenditures, and the challenge of monetizing AI-driven innovations.

Risks and Challenges: Execution and Market Concerns

Meta's AI-driven growth narrative is not without its pitfalls. The company's aggressive spending on AI infrastructure-projected to grow at a "significantly faster percentage rate" in 2026-could strain short-term profitability. Additionally, while AI-powered ad tools have delivered measurable results, the broader metaverse segment remains a financial drag. For all its hype, Reality Labs generated just $470 million in revenue in Q3 2025 a stark contrast to its losses.

Regulatory headwinds also loom large. As AI systems become more pervasive, governments may impose stricter oversight on data usage, algorithmic transparency, and content moderation-areas where Meta has faced criticism in the past. These risks could delay product rollouts or necessitate costly compliance measures.

Conclusion: Balancing Growth and Valuation

Meta Platforms stands at a crossroads. Its AI investments are ambitious, well-funded, and already yielding tangible benefits in ad performance and user engagement. The stock's current valuation, while conservative, appears to discount these growth drivers, offering a potential margin of safety for investors willing to tolerate near-term volatility.

Yet, the path to AI dominance is fraught with execution risks. The company must demonstrate that its Reality Labs and hardware initiatives can eventually turn a profit, not just absorb losses. For now, the "Buy" ratings from analysts and the DCF analysis suggest confidence in Meta's long-term trajectory. However, investors should remain vigilant about the balance sheet and cash flow dynamics as the company scales its AI ambitions.

In the end, the decision to buy Meta stock before 2026 hinges on one question: Can Meta's AI-driven transformation outpace its near-term challenges? For those who believe the answer is yes, the current valuation offers an intriguing entry point.