Down About 29%, Is Meta Stock a Buy, Sell, or Hold?

Meta Platforms has dropped 29% even as the company posted 33% revenue growth in Q1 2026, creating a sharp disconnect between operational performance and market sentiment. The ad business is delivering strong engagement and pricing power, but investors are reacting to dramatically expanded capital expenditure guidance.

Meta raised its 2026 capex budget to $125-145 billion, primarily for AI infrastructure buildout. The spending plan represents a massive bet on artificial intelligence with returns that remain unproven, creating execution risk that's weighing on the stock despite operational strength.

The stock now trades at a forward P/E of 17, below its historical multiple and suggesting the market has priced in significant uncertainty around the AI investment thesis. The valuation reflects skepticism that Meta can convert its infrastructure spend into meaningful revenue growth or margin expansion.