Meta (META) to Spend $135 Billion on AI

Meta Platforms (NASDAQ:META) shares fell 4.9% to 582.90 dollars as investors weighed the company's plan to pour up to 145 billion dollars into artificial intelligence infrastructure this year against questions about whether its advertising engine can keep justifying that spending.

Why The Ad Business Still Runs The Show

Meta's entire strategy traces back to one thing: advertising. In the first quarter of 2025, ad sales hit 55 billion dollars, or 98% of total revenue. CEO Mark Zuckerberg has been blunt about where AI fits into that picture. On the company's Q1 2025 earnings call, he described a future where any business simply tells Meta what result it wants and how much it will pay, and Meta's systems handle the rest. He argued that if this works, advertising could grow into a much bigger slice of global economic activity than it is now.

That quarter, ad impressions climbed 19% year over year and the average price per ad rose 12%, pushing revenue up 33% from a year earlier, the fastest pace since the third quarter of 2021. Those numbers explain why Meta feels comfortable nearly doubling capital spending from the 72 billion dollars it spent last year to a range of 125 billion to 145 billion dollars in 2026, most of it aimed at AI infrastructure and data center capacity.

Meta's Valuation, Momentum and Yield

Meta trades at a price to earnings ratio of 24.31, which looks reasonable next to its own history and against other AI focused megacaps, especially given the company's track record of turning ad growth into real profit. The stock's market capitalization sits at 1.48 trillion dollars, and shares have traded anywhere from 540.18 to 691.52 over the past year, meaning the current price sits roughly in the lower third of that band. The relative strength index reads 50.04, a neutral number that suggests the stock is neither overbought nor oversold, just adrift while the market decides what to make of the spending plan. The dividend yield stands at 0.36%, a modest return that signals Meta is still prioritizing reinvestment over cash returns to shareholders.

The bull case rests on the idea that AI investment sharpens ad targeting and pricing power, extending the kind of growth seen in the first quarter. If Zuckerberg's vision plays out, advertising becomes an even larger share of global GDP, and Meta captures outsized benefit given its reach across Facebook, Instagram and its other apps. The bear case is more straightforward: spending has roughly doubled year over year with no guarantee the payoff arrives on a matching timeline, and investors have already shown they are nervous, given the stock's pullback this year.

What The Stock's Slide Since January Signals

Meta shares are down 15% in 2026 as of late June and sit 29% below their record high. That drop reflects a market that wants to see AI spending translate into faster ad revenue growth, not just bigger infrastructure bills. With ad impressions and pricing both still climbing as of the most recent quarter, the underlying business has not shown cracks. The open question is how long investors will wait for Meta's AI bet to show up clearly in the numbers before patience runs thinner.