Why Meta is My Largest Position By Far

In an era where artificial intelligence (AI) is reshaping global industries, Meta Platforms Inc. (META) stands out as a rare combination of strategic foresight, capital discipline, and high-margin potential. As of Q3 2025, the company's aggressive AI investments-backed by a 36–38% allocation of revenue to capital expenditures (capex) and a total expense budget of $116–118 billion-underscore its commitment to dominating the next frontier of technology. This analysis argues that Meta's AI-driven growth strategy, paired with its ability to sustain margins despite heavy spending, makes it an unparalleled investment opportunity.

AI as a Strategic Lever for Long-Term Growth

Meta's 2025 capex of $70–72 billion-a 93% increase from 2024-reflects its prioritization of AI infrastructure, including data centers, servers, and cloud capacity. This spending accounts for 36–38% of its 2025 revenue, the highest capex-to-revenue ratio in the company's history. Such a bold allocation is not merely about scale but about securing a leadership position in frontier AI. For instance, the company is developing Meta Superintelligence Labs and AI-powered consumer hardware like AI glasses, aiming to create "personal superintelligence" tools for both individuals and enterprises.

The rationale is clear: AI is the new operating system for the digital economy. By investing heavily in infrastructure and open-source AI models, Meta is positioning itself to capture value across multiple layers-from cloud computing to end-user applications. According to a report by , Meta's $72 billion AI infrastructure budget for 2025 is part of a broader "compute arms race" to outpace rivals like Google and Microsoft. This strategic bet aligns with the company's historical strength in platform-driven ecosystems, where high-margin software innovations (e.g., Facebook, Instagram) have historically offset capital-intensive hardware investments.

What sets Meta apart is its ability to balance aggressive reinvestment with margin preservation. For example, the company's AI-related operating expenses in Q3 2025 surged by 32% year-over-year to $30.7 billion, driven by infrastructure costs and talent acquisition. Yet, these expenses are concentrated in high-impact areas such as AI R&D and data center expansion, which are expected to yield scalable, high-margin products. As noted by , Meta's leadership has emphasized that these investments are "not just about catching up but about building a moat around AI capabilities".

Margin Sustainability and the Path to 2026

A critical concern for investors is whether Meta's AI investments will erode margins. While the company's free cash flow is contracting in 2025, depreciation will spread the $70–72 billion capex over multiple years, mitigating the near-term impact. Moreover, Meta's operating cash flow and balance sheet strength-bolstered by $54 billion in 2024 free cash flow-provide a buffer against volatility.

Looking ahead, 2026 will see even more aggressive spending, with capex expected to grow "notably larger" than 2025 according to a recent analysis. This trajectory, however, is not a gamble but a calculated escalation in response to the accelerating AI arms race. By 2027, the company's current investments in AI infrastructure and talent are projected to mature into revenue-generating assets, such as enterprise AI tools and immersive metaverse platforms. highlights, Meta's ability to monetize AI through advertising, cloud services, and hardware sales creates a multi-vector revenue engine.

Conclusion: A Compelling Case for Strategic Conviction

Meta's AI-driven strategy is a masterclass in aligning capital allocation with long-term value creation. By allocating 36–38% of revenue to AI infrastructure and talent, the company is not only addressing immediate competitive pressures but also building a foundation for sustained growth in a high-margin ecosystem. While short-term margin compression is inevitable, Meta's financial flexibility and the compounding returns of AI innovation make it a standout position in today's market. For investors seeking exposure to the next phase of the digital revolution, Meta's bold bets are not just justified-they are essential.