I hit the buy button on Meta Platforms (NASDAQ:META | META Price Prediction) again last week, and I will hit it again this week if the capex conversation around Wednesday’s earnings knocks the stock down further. That is the confession. The company keeps handing me evidence that its core engine is stronger than the headline noise around AI spending, and I keep responding by adding shares.
What pulls me back is simple. Meta owns the largest connected audience in human history and monetizes it at margins most industrial companies only dream about. In Q1 2026, family daily active people reached 3.56B. That is the audience. Ad impressions grew 19% year over year and the average price per ad grew 12%. Both dials turning at once is the reason my thesis stays intact.
Three Pillars Under the Buy Button
First, the ad engine. Q1 2026 revenue came in at $56.31B, up 33.1% YoY, with EPS of $10.44 beating the $6.66 estimate for the fifth straight beat. Operating income grew to $22.87B and the operating margin held at 41.4%. Advertising revenue of $55.02B is doing the heavy lifting while Reality Labs’ $4.03B quarterly loss barely dents the P&L.
Second, the balance sheet. Debt/equity sits at 0.386. Interest coverage is 71.5x. Cash on hand: $23.43B against $395.25B in assets. ROE is 30.24%, ROIC 20.69%. When a company tells me it plans to spend $125B to $145B on capex in a single year, I want to see it can absorb execution stumbles without financial strain. Meta can.
Third, capital return. FY2025 buybacks totaled $26.25B and the quarterly dividend of $0.53 runs roughly $1.34B per quarter. An FCF yield of 3.53% keeps real cash flowing back to owners while the AI buildout runs.
Why Meta and Not the Obvious Alternatives
I already own Alphabet (NASDAQ:GOOGL) and passed on adding more because Meta’s operating margin of 41.4% and ROE of 30.24% deliver a cleaner return-on-capital profile than any other ad-supported name I hold. I looked at Snap (NYSE:SNAP) and could not build a case that competes with Meta’s 3.56B daily active people scale advantage. On the AI valuation debate, Polymarket’s crowd assigns 82% odds that Meta finishes 2026 with a higher valuation than OpenAI. The market already believes the incumbent wins this stretch of the race.
The Real Risk
The risk is capex, plainly stated. Full-year 2026 capex was raised to $125B to $145B from $115B to $135B, citing higher component pricing and data center costs. After the Q4 2025 report, shares dropped 8.55% on earnings day when the initial capex bomb landed. The one-week move of -7.87% into this week’s Q2 report shows the market rehearsing that trade again. I take the risk seriously. What keeps me buying is that Q1 2026 free cash flow still grew 11.7% to $12.39B while capex jumped 46.8%. Meta is spending from a position of operational strength.
What Keeps the Buy Button Active
This remains a compounder trading at a P/E of 22, with a 3.56B-person audience, a 41.4% operating margin, and a balance sheet that can absorb every dollar of AI spend without touching the dividend or the buyback. I will keep buying until one of those numbers breaks.
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