Is Meta Platforms (META) a Buy in 2026 Amid Earnings Optimism and Valuation Discounts?

The question of whether Meta Platforms (META) is a compelling investment in 2026 hinges on two critical dynamics: the trajectory of its earnings estimate revisions and the interplay of its valuation multiples with those of its peers. While the company's aggressive investments in artificial intelligence (AI) and infrastructure have raised concerns about near-term profitability, its forward-looking metrics and relative valuation suggest a nuanced case for cautious optimism.

Earnings Estimate Revisions: A Mixed Signal

Meta's 2026 earnings estimates have shown a modest upward bias, with the Zacks Consensus projecting full-year earnings of $23.04 per share. However, recent revisions tell a more complex story. For Q4 2025, the consensus estimate has been trimmed slightly, from $7.55 to $7.51 per share according to MarketBeat, reflecting lingering uncertainties about the impact of its $70–72 billion capital expenditure plans in 2025 as reported by Nasdaq. These investments, while critical for AI-driven ad performance and metaverse development, are expected to weigh on expense growth in 2026 according to Trefis analysis.

Yet, analysts remain cautiously bullish. Morgan Stanley anticipates Meta's 2026 revenue could outperform consensus by 2–4%, bolstered by Q4 guidance. This optimism is partly rooted in the company's resilient revenue growth- up 26% year-over-year in Q3 2025-and its strategic pivot toward AI, which is seen as a long-term catalyst for ad monetization. The challenge lies in reconciling these growth prospects with the drag from one-time charges, such as the $15.93 billion non-cash tax hit in Q3 2025 as disclosed in the earnings report, which temporarily distorted earnings visibility.

Valuation Multiples: A Tale of Contrasts

Meta's valuation metrics present a paradox. Its forward price-to-earnings (P/E) ratio of 21.5x as noted by Trefis is below the industry average, suggesting a discount relative to peers. However, its price-to-sales (P/S) ratio of 7.22x as reported by Nasdaq and price-to-book (P/B) ratio of 7.56 are significantly higher than sector benchmarks, reflecting the market's premium pricing of its intangible assets and growth potential. This divergence underscores the tension between Meta's current earnings power and its aspirational AI-driven future.

Comparisons with Alphabet and Amazon further highlight this tension. Alphabet trades at a forward P/E of 19x according to SP Global, while Amazon's forward P/E is 32.3x as reported by Yahoo Finance, despite Meta's faster revenue growth (26% in Q3 2025 vs. Amazon's 13% according to Nasdaq). Alphabet's lower multiple is partly attributable to regulatory headwinds and slower monetization of AI initiatives as analyzed by SP Global, whereas Amazon's premium reflects investor confidence in its AWS cloud segment and advertising expansion according to Techi. Meta's P/S ratio of 7.22x as reported by Nasdaq is notably lower than both Alphabet's 30.92x and Amazon's 32.78x according to Nasdaq, suggesting it is priced more conservatively relative to its peers.

The Investment Case: Balancing Growth and Risk

Meta's valuation discounts appear to reflect skepticism about its ability to sustain high growth while absorbing the costs of AI and metaverse investments. Reality Labs, for instance, remains a drag on profitability, with operating losses and projected heavy spending. Yet, the company's strong return on equity (12.0%) and EBITDA of $28.26 billion demonstrate its core business remains robust.

The key question is whether the market has already priced in the full potential of Meta's AI-driven ad stack and metaverse ambitions. If the company can demonstrate that these investments yield tangible returns-such as higher ad margins or new revenue streams-the current valuation could appear undemanding. Conversely, if expenses outpace revenue growth, the discount may persist or widen.

Conclusion: A Cautious Buy

Meta Platforms' 2026 investment case rests on its ability to navigate the near-term costs of transformation while delivering on long-term AI-driven growth. While earnings estimate revisions have been modest and valuation multiples remain mixed, the company's relative discount to peers like Alphabet and Amazon suggests a margin of safety. Investors willing to tolerate short-term volatility for exposure to a high-growth, AI-first platform may find META compelling-but only with a clear-eyed view of the risks.