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Meta's AI Buildout Lifts Results as Wall Street Splits on Valuation Risk

Lofty valuation meets a costly AI buildout that still must deliver.

Overview

  • Needham’s Laura Martin warns the stock is priced for perfection and could fall 10% to 15% if growth disappoints.
  • Bullish analyses cite AI-driven gains, including a 30% year-over-year increase in Instagram Reels watch time in Q3 2025 and a reported 3% quarter-over-quarter lift in ad conversions from newer models.
  • Meta raised its FY2025 capital spending plan to $70–72 billion, a step that previously triggered a 17% sell-off as management sought to ease compute constraints.
  • Full-year 2025 revenue reached $200.9 billion, up 22% from 2024, while EPS slipped about 2% to $23.49 due to a one-off tax provision.
  • The company’s market value is around $1.8 trillion with shares near record highs, trading near 24 times trailing and forward earnings, as some commentators project a potential path to $3 trillion over time.