Meta Stock Is Up 4.4% Today — And Wall Street Still Thinks It’s 47% Undervalued

One version of this tale seems almost too simple. The company behind Facebook, Instagram, WhatsApp, and Messenger, Meta Platforms, reported full-year 2025 revenue of $200.97 billion, a 22% increase from the previous year.

For a company that already makes hundreds of billions of dollars a year, that is an astounding growth rate, and it was made possible by an advertising machine that, by all measures, continues to outperform what most people believed was feasible at this scale. In December 2025, there were 3.58 billion daily active users across the Meta app family. Every day, 3.5 billion users open these apps, producing the data that powers the targeting engine that generates the revenue-generating ads.

Meta Platforms Inc.

The flywheel continues to turn. With a P/E ratio of about 20, Meta stock, which is currently trading at about $600 following a 4.4% gain on April 8, appears to be reasonably priced for a business expanding at this rate. However, the stock has dropped by roughly 11% in the last month, a considerable distance from its 52-week high of $796.25, and there is still much disagreement about where it will go from here.

The expenditure is the problem. Meta made $72.22 billion in capital expenditures in 2025, a sum that already caused some analysts to express concern as the cost structure increased. Management has directed capital expenditures of $115 billion to $135 billion for 2026. That represents an 88% increase in just one year at the top end. The funds are being used for the expansion of data centers, the acquisition of semiconductors, and the AI infrastructure that Meta believes will define its competitive position over the next ten years.

Racks of custom AI chips are being installed inside the company’s expansive data centers in locations like Eagle Mountain, Utah, and DeKalb, Illinois, at a rate that is truly unprecedented in business history. The main question hanging over Meta stock at the moment is whether that investment yields returns commensurate with its scale, and it won’t be resolved anytime soon.

As this develops, it appears that Meta has essentially made the decision to spend heavily now in the hopes that the AI-enhanced advertising system will generate enough additional revenue in the future to cover the expense. To be fair, there are early indications that that wager is beginning to pay off. Advertisers have seen quantifiable performance gains thanks to Meta’s AI-driven targeting algorithms and automated campaign tools. In 2025, average pricing per ad increased by 9% while ad impressions increased by 12%.

These two figures moving in the same direction at the same time is not something that happens by accident. Because the AI advancements are increasing the effectiveness of the ads, advertisers are willing to pay more, which increases the system’s revenue. It makes sense. The question is whether it can grow quickly enough to absorb $135 billion in annual spending without causing margin compression that would worry investors with longer time horizons.

Reality Labs continues to be this story’s awkward chapter that no one is quite sure how to end. With only $2.21 billion in revenue in 2025, the division—which houses Meta’s aspirations for virtual and augmented reality, including the Quest headsets and whatever the metaverse ultimately becomes—dragged overall operating profit down by $19.19 billion. Meta has stated that Reality Labs’ losses in 2026 are anticipated to be roughly comparable, which is a major burden on an otherwise outstanding income statement. When or if the metaverse story will generate enough revenue to cover the multi-year investment is still up in the air.

The year 2022, when Meta’s stock plummeted following Zuckerberg’s announcement of the shift to the metaverse and the market responded with nearly overt animosity, continues to serve as a warning. Many investors believed the company had lost focus at the time. Since then, Meta has shown them to be mistaken by resuming disciplined execution and reporting the kind of revenue growth that usually puts an end to disputes. The story of Reality Labs might have a similar plot: years of perseverance followed by a product that makes sense all of a sudden. Or it doesn’t. Both results are real-time.

The community of analysts is becoming more upbeat. With 38 Buy ratings and just 8 Holds, the consensus price target is at $843.57, suggesting a 47% increase from current levels. According to a well-known valuation framework, Meta’s fair value is $723, meaning that the stock at $600 offers a significant discount even before taking into consideration the more optimistic scenarios. These are not speculative estimates from houses trying to fabricate a narrative; rather, they represent a sincere belief that the advertising industry alone, which is expanding at a rate of 22% per year and utilizing AI on a large scale, warrants a price that is much higher than the current stock price.

There is a chance that spending on AI will accelerate expenses more quickly than revenue, resulting in a gap that will take longer to close than the current enthusiasm anticipates. That situation is real as well. Right now, Meta stock is essentially a wager on which of those two timelines turns out to be accurate, and even for those who closely follow this company, the answer is still genuinely unknown.