Should You Buy Meta Platforms Stock Before July 29? Wall Street Has a Clear Answer for Investors.
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Should You Buy Meta Platforms Stock Before July 29? Wall Street Has a Clear Answer for Investors.
08 mins
Meta Platforms (NASDAQ: META) stock is down 24% from its high amid concerns about how much money the company is spending on artificial intelligence infrastructure. Investors will get more information on that topic when Meta announces second-quarter financial results on Wednesday, July 29.
However, Wall Street sees a buying opportunity ahead of the report. Among 71 analysts, Meta has a median target price of $815 per share. That implies 36% upside from its current share price of $598.
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Here’s what investors should consider before buying Meta stock.
Image source: The Motley Fool.
Meta is primarily monetizing AI through its advertising business
Meta Platforms owns the three most popular social media platforms by monthly active users: Facebook, WhatsApp, and Instagram. The company uses consumer data generated by those platforms to recommend content and target ads, creating a network effect that makes its social media properties more engaging for users (and more valuable for advertisers) over time.
Meta Platforms is investing aggressively in artificial intelligence infrastructure. Earlier this year, the company raised its 2026 capital expenditure (capex) forecast to $135 billion at the midpoint, up from $125 billion. That is nearly double its $72 billion in capex spending in 2025, which itself was nearly double the $39 billion in capex spending in 2024.
Meta is already realizing returns on those investments. In the first quarter, ad impressions delivered across its social media properties increased 19%, and the average price per ad increased 12%. Those changes reflect higher user engagement and greater advertiser demand, driven by proprietary AI models that rank and recommend content.
Nevertheless, Meta stock currently trades 24% below its high, suggesting that investors are worried about whether the company can earn sufficient returns on that invested capital. On that topic, Bloomberg reports that Meta is planning to rent out excess compute capacity to customers, essentially creating a neocloud business similar to CoreWeave.
Meta has not commented on the Bloomberg report, but management could weigh in on the topic when the company reports financial results this week. Meta may also address other AI monetization opportunities, including its personal assistant, Meta AI. The company recently added shopping mode and task automation features to the product, expanding its addressable market.
Meta stock looks cheap despite the risk of post-earnings volatility
Meta Platforms will report second-quarter financial results after the stock market closes on Wednesday, July 29. The Wall Street consensus estimate calls for revenue to increase 26% to $60.1 billion, while earnings grow less than 1% to $7.22 per share. Whether the stock moves up or down after the report depends as much on what management says as it does on the actual financial results.
For example, Meta beat estimates in the first quarter, but the stock still dropped 9% the next day because investors were more concerned about the company raising its capex outlook. The same thing could happen this time. Indeed, Alphabet stock dropped following a strong financial report last week, simply because the company raised its capex forecast.
As of July 27, options pricing information implies a 7% move in Meta stock (either higher or lower) after the company announces its second-quarter financial results. That means the stakes are particularly high for prospective investors, but I think the stock is worth buying at its current price, despite near-term volatility.
Wall Street expects Meta’s earnings to increase at 22% annually over the next three years. That makes the current valuation of 21.5 times earnings look cheap. Those metrics give a price-to-earnings-to-growth (PEG) ratio slightly below 1, which is usually interpreted as indicating a stock is undervalued. Meta’s PEG ratio is currently at its lowest level in three years. I see that as an attractive entry point for long-term investors.
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Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Meta Platforms. The Motley Fool has a disclosure policy.
