Meta Platforms (NASDAQ: META) has had a rough start to 2026, with shares down 5% while the Nasdaq Composite has climbed 11% over the same period.
Heavy capital spending on artificial intelligence projects has unsettled investors, raising doubts about when those investments will translate into meaningful returns.
That narrative shifted sharply on July 1, when META stock surged nearly 9% following a Bloomberg News report that the company may begin selling excess AI cloud computing capacity to customers.
Meta is on track to spend $135 billion in capital expenditure this year at the midpoint of its guidance range, a substantial increase from $72.2 billion last year.
The company has been deploying that capital to build frontier AI models through its Superintelligence Labs division and to deepen AI integration across its advertising and application platforms.
Those investments are already producing measurable results, with the Muse Spark advanced AI model driving a double-digit percentage increase in user sessions on Meta AI.
The Meta AI business assistant is resolving client issues 20% faster, and the number of advertisers using Meta’s generative AI creative tools has surpassed 8 million.
Daily users of Meta’s AI glasses doubled year over year in Q1, signaling that its push into AI wearables is also gaining traction with consumers.
If Meta moves ahead with renting out excess infrastructure, it could tap into an AI cloud market that Gartner projects will generate $267 billion in revenue by 2030.
Meta’s Q1 revenue already climbed 33% year over year to $56.3 billion, demonstrating strong underlying momentum even before any cloud revenue materialises.
Adjusted earnings per share grew a more modest 14% after excluding a one-time income tax benefit, but analysts expect earnings growth to accelerate from an estimated 8.5% increase in 2026 onward.
On the valuation front, META trades at a trailing earnings multiple of just 21, a steep discount to the Nasdaq Composite’s multiple of 39, making it look attractive relative to its peers.
The stock also trades at 7 times sales, a slight premium to the Nasdaq Composite’s average sales multiple of 5.3, reflecting confidence in its revenue trajectory.
According to eMarketer, Meta’s digital ad market share could reach 27% in 2026, which would surpass Google and underline how effectively AI tools are boosting advertiser returns.
With the digital ad market projected to exceed $1.5 trillion in revenue by 2030, Meta has a significant runway to outperform Wall Street’s revenue estimates in coming years.
Analysts are forecasting a 26% jump in Meta’s revenue this year, followed by healthy double-digit growth in both 2027 and 2028, though at a somewhat slower pace.
If Meta generates $354 billion in revenue in 2028 and maintains its current 7x sales multiple, its market cap could rise to approximately $2.5 trillion.
That scenario implies a potential 60% upside over three years, giving long-term investors a compelling reason to consider META while it remains at a discounted valuation.
