Why Meta Stock Could Rally in 2026: The Comeback Story Investors Are Missing

The Growth Numbers Tell a Different Story

Meta Platforms (NASDAQ: META) has been under pressure recently, with shares down roughly 20% from their peak despite posting an 11% year-to-date gain. Meanwhile, the S&P 500 has climbed 17%, leaving Meta trailing the broader market. Yet the company’s latest financial performance suggests the pessimism may be overblown.

In Q3, the social media giant reported revenue of $51.2 billion, representing 26% year-over-year growth—a figure that beat management’s guidance ceiling of $50.5 billion. For a company of Meta’s scale and maturity, this growth velocity is exceptional. The driver? Artificial intelligence. According to CEO Mark Zuckerberg, AI-powered content recommendations kept users engaged longer: 5% more time on Facebook, 10% additional hours on Threads, and a staggering 30%+ increase on Instagram versus the prior year.

This user engagement directly translates to more ad impressions and higher revenue. The numbers demonstrate that Meta’s core platforms remain competitive against emerging rivals, contrary to earlier market predictions of their decline.

The Capex Controversy: A Market Overreaction?

The real tension stems from Meta’s ambitious infrastructure spending plans. Management disclosed that 2026 capital expenditures will be “notably larger than 2025,” with 2025 alone projected at $66 billion to $72 billion. This escalation from 2024’s $39.2 billion suggests Meta could exceed $100 billion in annual capex by 2026—a substantial commitment.

The concern is straightforward: these spending levels nearly match the company’s operating cash flow, leaving minimal room for shareholder returns or other investments. Understandably, this has spooked the market.

However, context matters. Nvidia’s outlook provides a telling perspective: global data center capex is forecast to surge from $600 billion in 2025 to $3 trillion to $4 trillion annually by 2030. This explosive demand means virtually every AI-focused technology giant will soon face similar capital allocation pressures.

Valuation Signals a Comeback Opportunity

Trading at 21.5 times projected 2026 earnings, Meta appears reasonably valued despite the spending headlines. The stock is being penalized for moving first into heavy infrastructure investment—a burden that other tech giants will inevitably shoulder within months.

The market’s reaction seems disproportionate to the fundamentals. Meta’s strong Q3 results, continued user growth, and AI-driven engagement trends suggest the company is well-positioned for sustained performance. Once investors recognize that capex intensity is industry-wide rather than company-specific, sentiment could shift dramatically.

A comeback in 2026 isn’t just possible—it’s increasingly likely if Meta maintains its current growth trajectory while competitors begin announcing their own spending sprees.