META
The setup: plenty of growth, plenty of side-eye
Meta is heading into its Q2 earnings report next week with a classic tech-stock problem: the business looks strong, but the bill for the future is getting really expensive. Shares slipped Wednesday as investors dug into the company’s AI spending plans and asked the obvious question: when does all this capex start paying rent?
Wedbush kept its Neutral rating on Meta and slapped a $671 price target on the stock, well below the $825.49 consensus estimate floating around Wall Street. That’s a polite way of saying: yes, the company is still a beast, but we’re not ready to chase it through the AI smoke just yet.
The capex monster is still in the room
Here’s the number that’s doing the most damage to everyone’s vibe:
- Wedbush thinks Meta’s 2026 capex hits $138 billion, up 98% year over year.
- Consensus is even higher at $139 billion, basically a double.
- Management’s own guidance still sits in the $125 billion to $145 billion lane.
- By 2027, Wedbush sees capex climbing to $173 billion, while some buyers on the Street are already whispering numbers above $200 billion.
That’s not a side quest anymore. That’s the main plot. And until investors see a clearer path from AI spending to actual dollars, the stock is going to keep getting grilled like it forgot to do the reading.
Ads are fine. The rest is the mystery box
To be fair, Meta’s core advertising engine still looks healthy. Wedbush expects the company’s ad business to keep benefiting from product improvements and a decent macro backdrop. AI is also helping the ad machine run better — think compute efficiency gains in Andromeda, Lattice modeling improvements, and the GEM architecture.
But the debate isn’t really about ads. It’s about everything beyond ads.
Meta AI, Muse Spark, Business AI, subscriptions, cloud ideas, custom silicon — these are the shiny new toys. The problem is they’re still early, and “early” is corporate for “please be patient while we spend a small country's GDP.”
Why investors should care
Meta’s Business AI tools are growing fast — Wedbush said weekly conversations jumped 10-fold from 1 million to 10 million since the start of the year — but direct monetization hasn’t kicked in yet. That’s the gap in plain English: engagement is rising, cash flow from the new AI stack is not.
So yes, the ad business is doing its job. But the market is increasingly asking whether Meta can turn its AI splurge into something more than a very expensive science project.
Big picture: Meta still has plenty of growth juice, but the stock may stay stuck in “show me” mode until the company proves its AI spending can generate real, diversified revenue instead of just a bigger capex tab.