Meta Platforms (META) stock barely moved following news that China reportedly blocked the company's $2 billion acquisition of artificial intelligence (AI) firm Manus, a deal that was geared toward boosting Meta's agentic AI push across Facebook, Instagram, WhatsApp, and its entire AI ecosystem. The reason behind this apparent lack of concern over the deal may lie in the company's core business model. Indeed, despite the potential setbacks of failing to advance its AI capabilities through the acquisiton, Meta Platforms continues to make money from its advertising operations. It's not just that, either — the company has already allocated billions to funding its AI initiative.
Instead of reacting to the acquisition news, META stock is now falling following the company's latest earnings report. Let's take a closer look.
About Meta Platforms Stock
Headquartered in Menlo Park, California, Meta Platforms is the firm behind Facebook, Instagram, WhatsApp, Messenger, Threads, and Reality Labs. With a market capitalization of close to $1.7 trillion, Meta remains one of the largest and most profitable firms in Big Tech.
META stock currently trades near the $611 mark. While shares are down significantly from their all-time high, they are still well above the 52-week low of $520.26. With a five-day drop of 6% driven mostly by Meta's first-quarter earnings report, it seems like investors don't see the Manus-acquisition setback as a serious issue. Before the Q1 report on April 29, META stock traded closer to the $670 mark.
The valuation isn't cheap, but it doesn't look unreasonable given that Meta Platforms is a massive player in the AI space as well as an advertiser. META stock has a forward price-to-earnings (P/E) multiple of 22.5 times, a price-to-sales (P/S) multiple of 8.4 times, and a price-to-cash-flow ratio of 17.8 times. With a P/E-to-growth (PEG) multiple of 1.09 times, the stock looks reasonable in terms of valuation given the ability to compound revenue amidst the large-scale investment in AI.
Meta Reports Q1 Earnings
According to the results, in Q1 2026, Meta Platforms reported revenue of $56.3 billion, up 33% year-over-year (YOY) and meeting the company's revenue guidance. Diluted EPS also came in at $10.44 in the first quarter, up 62% YOY.
More importantly, Meta is still doing extremely well in terms of advertising. Family daily active people came in at 3.56 billion on average for March 2026, representing a rise of 4% YOY. Ad impressions increased by 19% YOY, while average price per ad grew by 12% over the prior-year quarter. This means that Meta Platforms is still able to grow usage and revenue.
In Q2 2026, Meta expects revenue of $58 billion to $61 billion. However, according to management, the company now also expects to spend between $125 billion and $145 billion on capex in fiscal 2026. That is up from the previously estimated range of $115 billion to $135 billion — and the reason why shares are declining after the Q1 report. Meta's capital expenditures will go toward AI infrastructure and Superintelligence Labs, and reflects “expectations for higher component pricing this year and, to a lesser extent, additional data center costs to support future year capacity.”
What Do Analysts Think of META Stock?
Even after the capex news and the company's Manus setback, META stock still earns a consensus “Strong Buy” rating among analysts. The highest target for META stock stands at $1,015, while the lowest target sits at $676. The mean target price of $853.87 implies potential upside of about 40% based on current levels. That should help investors feel more confident about the stock, even though the company had to abandon its acquisiton and shares are trending downward following the Q1 report.
On the date of publication, Yiannis Zourmpanos did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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