Meta Platforms’ (META) recent trajectory after reporting its Q3 earnings results reflects just how much the market despises uncertainty. The company’s short-term pain—in this case, the double-digit post-earnings selloff—mirrors investor anxiety over a sharper-than-expected rise in AI investments and unclear returns, despite Meta’s financial and operational performance being extraordinarily strong. Since last week, the tech titan’s stock has dipped below $700 and has kept on falling.
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The debate is that this fear-driven playbook—worrying about reckless spending on new products like “superintelligence”—could turn into a metaverse 2.0 scenario. Yet the setup today is arguably different: Meta’s current AI investments aren’t a departure from its core business but rather an extension of it.
Given that recent price swings seem far more sentiment-driven than fundamentally justified, the selloff looks overblown. For long-term-oriented investors, that could make a Buy rating here look like a solid opportunity, in my view.
Dissecting the Selloff
At first glance, it made little sense for the market to react bearishly to Meta’s Q3 results, as the company once again delivered extremely healthy numbers. Revenue grew 26% year-over-year, while operating margins stayed comfortably above 40%—an impressive feat for a company in the middle of the heaviest investment cycle in its history, all funded by its own cash flows. Meta beat expectations across the board: revenue came in at $51.24 billion, about 3.7% above market estimates, and normalized EPS (excluding one-off items) reached $7.25, roughly 8.6% higher than consensus projections for the quarter.
On the operational side, the strength was just as clear. Ad impressions rose 14% year-over-year, while the average price per ad jumped 10%, showing solid operating leverage and sustained pricing power.
Even so, since markets trade on expectations rather than past results, the double-digit post-earnings selloff had everything to do with Meta’s investment guidance for 2025 and 2026. The primary concern, as CFO Susan Li put it, was that the range for this year’s capital expenditure would rise by ~$4 billion.
To make matters worse, Li added that CapEx dollar growth will remain notably higher in 2026 than in 2025, mainly driven by ongoing infrastructure spending. That extra $4 billion for 2025—and the talk of “little moderation” in 2026—spooked investors, who felt the new spending looked excessive, especially given that much of it isn’t aimed at enhancing Meta’s existing products, but rather at creating entirely new ones.
META’s Road to Becoming an AI Powerhouse
It’s not just recently that Meta Platforms’ investment case has been closely tied to its CapEx strategy. Over the past few years, the market has largely embraced Meta’s heavy spending on AI as a key part of its long-term growth story—mainly because those investments have consistently improved its core social media platforms. From 2021 to today, CapEx has climbed from $18.5 billion per year to $37.2 billion in 2024, and over the last twelve months alone, it has already reached $62.7 billion.
Much of the market’s confidence in Meta as an AI success story stems from the tangible outcomes of its heavy investment in the technology. User engagement has climbed sharply in recent years, while advertisers have seen steady improvements in their returns thanks to more precise, AI-driven targeting.
Together, these advances have propelled Meta’s top-line growth to more than 20%—specifically, 22% over the past twelve months—a remarkable achievement for a company generating nearly $190 billion in annual revenue.
Zuckerberg’s Achilles’ heel remains Reality Labs, the division behind Meta’s new product initiatives, such as VR headsets. It’s been a massive cash burner, accumulating $73 billion in losses since Q4 2020—including $4.5 billion just in Q3 2025.
This fuels skepticism that the “extra” CapEx Meta plans to deploy next year will again be funneled into projects that continue to lose money indefinitely, rather than strengthening the monetization of its core apps. And that uncertainty—the one thing the market despises most—is precisely what tends to trigger valuation re-ratings.
Is Superintelligence the New Zuckerberg “Metaverse”?
The excess CapEx beyond Meta’s core business clearly has a destination: superintelligence—essentially, next-generation AI models that demand aggressive investment in computing capacity.
The problem is that, as Evercore ISI analyst Mark Mahaney rightly points out, no one really knows what Meta’s offering will look like or how it will be monetized. In short, Meta is telling the market it plans to pour billions of dollars into something without a clear monetization plan. In the past, those billions were directed toward enhancing its core products, which carried far less uncertainty—something investors appreciate because it allows them to project outcomes with greater confidence.
That’s why Zuckerberg’s latest move was poorly received: it came off as reckless, hinting at a possible return to the “metaverse-style spending spree” that didn’t work out.
As a result, Meta now trades at about 22.5x earnings, roughly 12% below its historical average, making it—alongside Alphabet (GOOGL)—one of the most discounted Big Tech names. It’s worth remembering that Meta has a strong record of quick strategic turnarounds, as seen when it rapidly shifted from its metaverse obsession to an efficiency-driven AI focus.
If the stock were trading at stretched valuations far above its median and failing to deliver profitability in line with its AI ambitions, that would be a red flag. But worrying too much about how quickly or slowly superintelligence monetization unfolds in the short to midterm—while the company’s core fundamentals remain strong and intact—doesn’t make much sense, in my view.
Is META a Buy, Hold, or Sell?
Street consensus on Meta Platforms remains broadly bullish. Out of 42 analyst ratings over the past three years, 33 are Buy, eight are Hold, and only one is Sell. The average stock target price of $844.06 implies an upside potential of roughly 32% from the latest share price.
Why the Market’s Anxiety May Be Misplaced
It’s hard to point to anything fundamentally wrong with Meta’s thesis today that would justify such a massive selloff—aside from a heightened sense of uncertainty around its AI investments for 2026. In my view, this reaction is driven far more by sentiment than by any tangible, quantifiable impact on the company’s financials.
Sure, massive spending on AI infrastructure only makes sense if future monetization is on the horizon. But suggesting that Meta should stop playing offense—despite its enormous cash flow cushion and strong secular AI tailwinds—seems more misguided than continuing to invest aggressively in the current macro backdrop.
All things considered, the post-earnings selloff looks overdone, and investors willing to buy the dip here might be setting themselves up for a solid long-term opportunity.