After Skyrocketing 95% In 3 Years, Here Are The Bull And …

Revenue surge will lead to higher free cash flow

This company’s revenue growth has been accelerating. Sales were up 15.7% in 2023, 21.9% in 2024, and 22.2% in 2025. Analysts expect the top line to increase by 26.5% in 2026.

At Meta’s already massive scale, this is impressive. It indicates the benefit of operating in the digital world, where there is seemingly endless growth potential. The stellar performance is supported by a continuously expanding user base, which is at 3.6 billion daily active users.

Meta’s biggest bull case is that fantastic revenue growth will continue in the coming years. There’s a feedback loop at play. More users and engagement drive greater ad impressions and pricing. And the network effect gets stronger over time.

In the near term, revenue could be boosted by Meta’s plan to sell excess compute capacity to third-party customers. It’s hard to know how much of an impact this will have, though.

Founder and CEO Mark Zuckerberg also thinks his business is staring at a major opportunity to introduce new artificial intelligence (AI)-powered agents, experiences, and tools to both enterprises and consumers. Additionally, he envisions a scenario five years from now in which billions of people will be using personal AI agents.

The bull case also rests on the belief that Meta’s free cash flow (FCF) will surge again. This figure tanked 91% in the second quarter. But the optimistic view is that it’s only a temporary hit as the business invests aggressively in AI capacity.

The AI capex boom will prove to be wasteful capital allocation

Meta can be a polarizing stock. The AI capital expenditure (capex) boom separates the divide even further. After capex totaled $39 billion in 2024, it jumped to $72 billion in 2025. And it’s projected to be between $130 billion and $145 billion in 2026.

The trend is clear: There’s a high lihood that spending will continue to rise in the coming years.

What was once an extremely attractive, capital-light business model has now become a capital-intensive operation. As a result, FCF could turn negative this year. The bears question when the bleeding will stop. The clear risk is that the AI data center revolution will prove to be a gigantic waste of capital.

At the current valuation, Meta’s management team might be inclined to aggressively repurchase s, returning capital to investors and lifting earnings per . But buybacks have been halted this year.

A lot of attention goes to the headline capex projections, with almost no discussion about Meta’s other obligations. As of June 30, the business had $349 billion of contractual commitments, up from $28 billion a year ago. These don’t appear on the financial statements.

The data might not show it yet, but end-user AI demand from both enterprises and consumers could slow. These customers eventually need to move from the experimental phase to actually seeing AI produce measurable revenue and/or profit growth (for enterprises) and tangible daily benefits (for consumers). What if AI isn’t all that it’s cracked up to be?

Meta Platforms Stock Quote

NASDAQ: META

Meta Platforms

Today’s Change

(-3.54%) $-20.88

Current Price

$568.97

Key Data Points

Market Cap

$1.4TMarket cap calculated using publicly traded s outstanding only. Does not include unlisted, private, or dual-class non-traded s. Implied market cap may vary.

Day’s Range

$564.75 – $590.24

52wk Range

$520.26 – $790.80

Volume

59.9K

Avg Vol

18.1M

Gross Margin

81.75%

Dividend Yield

0.37%

Meta in the middle

As with many things in life and investing, reality will end up somewhere between the bull and bear cases. In three years, Meta could start to see its FCF bounce back. However, its immense spending spree could also be a misallocation of holder capital. Time will tell.

Meta is clearly one of the world’s most outstanding businesses, a view solidified by its enormous user base, network effect, and robust profits. At the current forward P/E multiple of 19.7, it’s easy to recommend buying the stock. It’s just essential that investors understand how much the thesis rests on how the AI boom evolves, a wildly uncertain outcome.