Meta Stock Was Unfairly Punished; Investors Should Focus on Future AI-Driven Growth

Tiger_James Ooi
10-31

Bad:

High Capex: Capex increased 110% YoY in Q3 2025, or 105% in the first three quarters of this year. High Estimated Capex: Meta expects 2026 capital expenditure (Capex) to increase significantly. The company raised the lower end of its Capex outlook for 2025 by $4 billion, now ranging from $70 billion to $72 billion. Lower Operating Income Growth (+18% YoY): Revenue rose 26% YoY, but expenses grew 32% YoY — expenses are rising faster than revenue.

 

Good:            

Meta recorded a one-time, non-cash income tax charge of nearly USD 16 B under President Donald Trump’s  One Big Beautiful Bill Act (OBBBA) fiscal policy, which reduced its quarterly net profit to USD 2.71 B. Without this one-time burden, net profit would have reached approximately USD 18.64 billion. Hence, Meta’s stock was unduly impacted by this one-time accounting charge.

But META expects a significant reduction in our U.S. federal cash tax payments going forward due to the implementation of the OBBBA. I reckon investors have yet to fully grasp the potential tax savings from 100% bonus depreciation and the deductibility of domestic R&D expenditures.

 

Overall, I remain constructive on Meta $Meta Platforms, Inc.(META)$ over the long term, but the “higher capex, lower margin” narrative may continue to weigh on the share price in the short term.

# META Cuts Metaverse Budget: Can it Close Its Earnings Gap?

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  • Valerie Archibald
    ·11-02
    My argument is simple . P/E ratio among AI leaders for META is quite low. If AI bubble to collapse, others would go south more than META. It is a solid company with future. I can wait for a year to see it goes up even if I know by Dec end it would atleast cross 700 mark.

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  • Mortimer Arthur
    ·11-02
    Forward PE of 24...the Steal of the Century!

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  • chenobserver
    ·10-31
    It's crucial to highlight the long-term potential here.
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