Meta’s Reckoning: A Bullish Pause?

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Meta Platforms (META 3.24%) has, of late, been the recipient of a rather excessive degree of investor enthusiasm. The fourth quarter of 2025 yielded a revenue increase of 24%, a figure which, while respectable, scarcely justifies the prevailing air of unbridled optimism. Earnings per share exceeded expectations, naturally, and the market responded with the predictable, and frankly tiresome, surge. One begins to suspect a certain lack of discernment amongst the financial classes.

The stock has, it is true, performed admirably, ascending a rather dizzying 387% over the past three years (as of January 30th). This, however, is precisely the sort of performance that should induce caution, not a giddy rush for the bandwagon. The narrative, as always, is ruled by sentiment, and sentiment is a notoriously unreliable guide.

One is compelled to ask: might Meta’s trajectory falter? Might the shares, after this prolonged ascent, experience a correction in 2026? A prudent investor should heed a certain warning, though there is, admittedly, a single, rather compelling reason to remain, if not bullish, then at least not entirely despondent.

A Pattern of Excess

One is often assured that past performance is no guarantee of future results. A platitude, of course, but not entirely without merit. Nevertheless, a glance at Meta’s chart reveals a certain… cyclicality. The year 2018 saw a decline of 26%, followed by three years of double-digit gains. 2022, predictably, brought another downturn (a rather substantial one, at 64%), again followed by recovery. If this pattern holds – and one should never assume it will, naturally – then 2026 appears destined for a pullback. A decline, whilst unwelcome, would not be entirely surprising, especially given the sheer scale of the recent gains.

The Weight of Ambition

Turning to the fundamentals, one finds a rather alarming commitment to capital expenditure. Meta intends to spend between $115 and $135 billion this year, a 74% increase over the $72 billion allocated in 2025. In 2021, the company’s capex totaled a mere $19 billion. The sheer magnitude of this increase is… noteworthy. Mr. Zuckerberg, it appears, is placing a considerable wager on artificial intelligence. The construction of data centers (a project grandly titled “Meta Compute”) and the development of a new large language model (“Avocado”) are consuming vast sums. He speaks, with characteristic hyperbole, of “building personal superintelligence.” One hopes, for the sake of shareholders, that this ambition is not entirely misplaced. A hint of disappointment in this area could be… problematic.

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A Question of Valuation

Despite this rather profligate spending, the valuation remains, if not precisely attractive, then at least not entirely repellent. The current forward price-to-earnings ratio of 24.8 is, by the standards of the current market, relatively modest. A higher valuation would, of course, significantly increase the risk of a negative reaction should Meta begin to report disappointing results. The shares have, undeniably, enjoyed a remarkable run. But, at present, the stock is not, strictly speaking, expensive. This, when coupled with the company’s revenue and profit gains, presents a compelling, if not entirely reassuring, picture.

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2026-02-05 15:12