The race to dominate artificial intelligence (AI) has never been fiercer, but for Meta Platforms, the journey is proving both lucrative and fraught with risk—a story that’s captivating investors, analysts, and the broader tech industry alike. As of early February 2026, Meta’s bold AI strategy has propelled it to the forefront of Big Tech innovation, yet its staggering spending and market volatility have sparked a heated debate: Is Meta’s AI gamble a masterstroke or a precarious bet?
According to The Motley Fool, Meta’s recent financial results are a testament to its AI-driven momentum. The company’s revenue surged 24% year-over-year to $59.9 billion in the fourth quarter of 2025, smashing analyst expectations. Daily user numbers averaged a jaw-dropping 3.58 billion across its suite of apps in December 2025—a figure Meta dubs “family daily active people.” But the real story lies beneath these headline numbers, where AI is quietly transforming Meta’s business model and, perhaps, the future of digital advertising.
Jensen Huang, CEO of Nvidia, recently singled out Meta as the top AI deployer in an interview with CNBC. He praised the company’s shift from traditional CPU-based recommenders to generative AI agentic systems, calling it a move that has “transformed social media operations and advertiser content creation.” Huang didn’t mince words: “Meta’s AI-driven ad ranking has delivered about four times more revenue impact than simply increasing ad load.” This endorsement from the industry’s leading chipmaker underscores Meta’s unique position in the AI arms race.
Meta’s AI-fueled growth is evident in its advertising business. The company reported that AI innovations powered a 3.5% increase in Facebook ad clicks and boosted Instagram conversions by over 1%. Perhaps even more impressive, its video generation tools have reached a $10 billion run-rate, growing nearly three times faster than overall ad revenue. Incremental return on investment (ROI) for AI infrastructure remains above 20%, and cash return on invested capital is over 52%—figures that would make any CFO envious.
Yet, for all its promise, Meta’s AI push is not without its critics or costs. The company is projecting capital expenditures (capex) for 2026 between $115 billion and $135 billion, a sharp jump from the $72.22 billion spent in 2025. Mark Zuckerberg, Meta’s chief executive, described this as a sprint toward “personal superintelligence,” telling analysts to brace for “a big year” in infrastructure and internal operations. The uptick, as reported by Reuters, is driven by rising third-party cloud charges, more depreciation tied to AI data-center assets, and steeper infrastructure operating costs.
Financial markets, however, are not always patient. On February 8, 2026, Meta shares dropped 1.3% as investors balked at the escalating costs. The S&P 500 software and services index fell almost 8% in the week ending February 7, wiping out around $1 trillion in market value since January 28. Data analytics firms like Thomson Reuters and RELX saw their shares tumble as well, spooked by fears that powerful new AI models could upend their business models.
Andrew Wells, chief investment officer at SanJac Alpha, captured the prevailing mood: “The market’s viewpoint is that the AI build-out trade … got too pricey.” He added, “It’s not that the trade is over, but it got too pricey in pulling forward all these potential future revenues and not really pricing in the risk into all that. So it’s a de-risking trade.” Morgan Stanley analysts echoed this sentiment, noting, “Investors right now are not forgiving about large investments without clear signal on return on invested capital.”
Meta’s operating margin has also taken a hit. The company’s 2025 operating margin was 41%, down from 48% in the fourth quarter of 2024, a decline attributed in part to increased depreciation and research expenses linked to AI investments. Free cash flow for the fourth quarter of 2025 stood at $14.08 billion after accounting for costs and investment outlays. While these numbers remain robust, they highlight the delicate balance Meta must strike between innovation and fiscal discipline.
Despite the market’s jitters, some see Meta’s AI bet as a long-term play with enormous upside. The Motley Fool recently predicted that Meta could join the exclusive $4 trillion market capitalization club within six years, by 2032. To get there, Meta would need a compounded annual growth rate of 14.2%—a tall order, but not impossible given its current trajectory. As of February 6, 2026, Meta’s market cap stood at $1.67 trillion, with shares returning more than 144% to investors over the past five years. Still, the stock has lost 7.8% in the last year and traded 7.51% lower in the last five market sessions, underscoring the volatility that comes with such ambitious spending.
Meta’s future guidance remains bullish. The company expects first-quarter 2026 revenue between $53.5 billion and $56.5 billion, which could mark a nearly 30% rise compared to the same period in 2025. But as The Motley Fool points out, the path to $4 trillion is riddled with challenges. Meta faces risks ranging from economic slowdowns to potential drops in advertising budgets—factors that could quickly dent its stock price. Furthermore, the company is still in the early stages of integrating large language models into its recommendation and ad products, meaning the full impact of its AI investments may take years to materialize.
The broader tech sector is feeling the heat as well. Big Tech’s combined capital expenditures for 2026 are projected at around $650 billion, rivaling the GDP of some nations. Microsoft’s capex hit $37.5 billion in its latest quarter, with revenue up 17% and profits surging 60%. Alphabet’s cloud revenue grew 48% to $17.7 billion, with a 30% operating margin, but its own 2026 capex forecast of $175 billion to $185 billion has raised similar concerns about when AI platforms like Gemini and Genie will deliver sustained profits.
For Meta, the immediate questions are all about execution: Can it keep ad prices and impressions climbing? Will expenses stay in check? And, as data-center investments accelerate, does cash flow remain solid? Tom Hainlin, investment strategist at U.S. Bank Wealth Management, summed it up: “This is the first time we’ve seen the large-cap tech companies … go through a really large capex cycle … and we’re seeing this volatility about whether this investment will translate, ultimately, into results.”
If Meta can replicate its early AI successes at scale, it may well become the template for profitable AI integration across industries. But as the company’s recent stock swings make clear, the road ahead is anything but certain. For now, Wall Street is watching—and waiting—to see if Meta’s AI vision will pay off, or if the costs of ambition will prove too steep.