Meta’s $72B AI Gamble Smartest Play Yet or Zuckerberg’s Biggest Risk?

Meta is trading at $747 a share, down 6% from its all-time high. And here’s the wild part: analysts think it could run another 46% higher… all the way to $1,086.

And the numbers on Meta? They’re insane. Revenue is up 21%, profits are up 36%, and operating margins are at 43%, meaning Meta keeps almost half of every dollar it makes.

But here’s the catch: Mark Zuckerberg just committed tens of billions to build the largest AI data centres on the planet, Prometheus and Hyperion. If he’s right, this cements Meta as the AI backbone of the future. If he’s wrong… this could be his last trillion-dollar bet.

Meta’s Overview

Meta Platforms is a global force at the intersection of social media, digital advertising, AI, and immersive tech. And here’s the thing: few companies on Earth touch as many lives, every single day.

Facebook may be the flagship, but Meta’s ecosystem also includes Instagram, WhatsApp, Threads, and Reality Labs, all of which link billions of people globally. Its key revenue driver remains advertising, especially Reels, which is projected to generate 50% of U.S. ad sales.

What makes Meta stand out is its ability to adapt and scale. It builds platforms people can’t stop using, and for proof of that, you only need to remember the first few years of Facebook. That same “habit loop” is still alive today, and it’s what keeps advertisers paying up.

At the same time, the company is pushing forward in AI, virtual reality, and augmented reality. In many ways, Meta isn’t just shaping how we communicate today; it’s also shaping the future. It is also laying the foundation for the digital worlds of tomorrow. So, you could say that Meta isn’t playing checkers; it’s quietly building the chessboard for the next decade.

And of course, analysts haven’t been sleeping on the stock. Currently, Meta has an overwhelmingly strong buy rating from 55 analysts, with a high target price of $1,086. That means Wall Street sees nearly a 50% upside from here, but do they know something retail investors don’t? Let’s find out.

Why It’s in the Spotlight

So, how does a company as consistent as Meta manage to take the spotlight?

The company has just released its second-quarter financials, which have caught the attention of many investors. We’ll discuss more of it later, but let’s say that its reports beat market expectations.

Meta became the talk of the town after its CEO, Mark Zuckerberg, disclosed that Meta will invest “hundreds of billions of dollars” to build massive AI data centers, starting with a multi‑gigawatt “Prometheus” facility expected online in 2026 and scaling to a 5 GW “Hyperion” cluster.

If Meta delivers according to its plan, it would significantly push the field of AI, accompanied by increased investments and trust. Meta isn’t just betting on the future; it’s trying to own the infrastructure of the future.

Meta’s Stock Price

Alright, let’s shift gears and talk about something every investor cares about: the stock price. 

At the time of recording, the stock price is $747.72, dropping 6% from its recent 52-week and all-time high of $796.25 back on August 15. That pullback might look scary, but sometimes the best opportunities hide right after a dip.

Meta is up over 40% in the last 52 weeks, beating the S&P 500 Tech Sector SPDR by a respectable margin. 

It also surpassed most of its peers in the Magnificent 7, trailing only Tesla. And if you’re keeping score, that’s a tough group to beat.

So, despite the recent pullback, Meta is still up by a decent margin. The big question: Does it still have gas in the tank? Let’s review its financials to find out.

Meta’s Financials

The company’s Q2 FY’25 financials highlighted a 21.6% increase in revenue and another 36.2% improvement at the bottom line. 

Profitability also strengthened, with operating margins expanding to 43% from 38% the previous year. That basically means Meta is retaining more money from every dollar it earns. Think about it this way: Meta is now turning almost half of its revenue into profit. That’s elite territory.

That means Meta is keeping more of each dollar it earns, which not only fuels growth but also makes its dividend program more sustainable for investors. We’ll take more of that later.

Growth Catalysts

Historically, Meta has performed well over the years. The question is: Can it sustain its performance? The short answer is yes. Let’s discuss how. But stay with me, because the scale of what Meta’s building is something most investors underestimate.

The most significant factor would be Meta’s Accelerated AI Infrastructure Investment, which puts the company at the forefront of AI innovation.

Meta has updated its 2025 capital expenditure guidance to $66 billion to $72 billion, which signals a substantial ramp-up from its prior commitment. The company expects another year of similar capital growth in 2026 to support its expansion of AI infrastructure. That’s more than the GDP of some countries!

Specifically, these investments are directed towards projects such as the Prometheus supercluster in Ohio, which is designed to accelerate AI model training at a massive scale. There’s also the Hyperion cluster in Louisiana, a data centre campus the size of Manhattan that will handle next-generation AI workloads. Imagine a data centre so large it rivals an entire city; that’s the level Meta is playing at.

It also supports the development of high-performance computing, new data centers, and Meta’s Superintelligence Labs, which focus on advancing frontier AI research.

Think about how you check Instagram or Facebook, you might tell yourself you’ll only scroll for five minutes, but suddenly 20 minutes have gone by. That’s the strength of habit. Meta’s ad engine works the same way: even as AI develops, advertisers keep pouring money into the platforms people can’t stop using. And here’s the kicker: that habit loop is what makes those billions in AI spending a little less risky than it looks.

Risks & Red Flags

Now, before you think Meta is unstoppable, let’s pump the brakes because the risks are very real.

Like many big companies, Meta faces regulatory scrutiny. However, its case is a little more peculiar. 

US legal authorities launched a probe after reports that its AI chatbots could engage in inappropriate conversations with minors, which is unacceptable. Since August, lawmakers have been pushing for the release of internal documents related to training, deployment, and child safety safeguards. And if regulators make an example out of Meta, the fallout could hit both reputation and revenue.

If found at fault, Meta could face fines, stricter AI regulations, product limitations, reputational harm, and increased oversight, which could lead to restrictions on future innovation. This territory is challenging to navigate; a single regulatory slip-up could halt years of innovation overnight.

Second, Meta’s decision to spend $66–72 billion could be seen as bullish, but on the other hand, it raises concerns given the history of its past big bets, such as the metaverse, which have yet to deliver strong returns. 

Its aggressive push in the AI industry leaves little margin for error. In the worst-case scenario, this wave of AI infrastructure spending could be Meta’s last major opportunity to sustain long-term growth and investor confidence. That’s why some investors see Meta as a genius move… and others see it as rolling the dice.

Valuation Breakdown

Now, with all of the external factors out of the way, let’s talk about Meta’s valuation.

Meta trades at a forward price-to-earnings ratio of 27.43 and a forward price-to-sales ratio of about 11.72. These levels indicate that the market anticipates continued growth, yet the stock does not appear overvalued. Given the company’s strong profitability and a high return on equity, Meta appears fairly valued, which is also supported by its scale and ability to generate cash. In other words, the market is pricing Meta for growth but not at nosebleed levels.

Compared to its industry peers in the Magnificent Seven, Microsoft trades at nearly 34 times forward earnings, and Amazon at about 34.5 times. Nvidia is far higher at almost 45 times forward earnings, with a price-to-sales ratio above 34. Of course, the outlier here is Tesla, with a forward P/E of 279. 

In comparison to these giants, Meta’s multiples are more modest, providing a balance of growth potential and risk. That’s a rare sweet spot: growth stock upside, but not growth stock pricing.

This makes Meta one of the more reasonably priced names in the Magnificent 7 while still offering solid exposure to AI growth.

Now, based on its current price at the time of recording, analysts see an upside potential of around 46% to $1,086. Given the company’s financial position, future projects, and momentum, this high target price doesn’t seem too far off from reality. The big question is — do you believe Meta can execute? Because the valuation says Wall Street does.

Who Should Buy This?

If you’re an investor who strongly believes in Artificial Intelligence, Meta could be the perfect addition to your portfolio. I find it a safe investment that could be held for the long term. And remember, “safe” here doesn’t mean boring, it means proven growth plus future upside.

Aside from Meta’s momentum and leadership in the AI industry, what stands out to me is its recent decision to start paying dividends. The company only began to pay dividends in 2024, which means that it is a very young dividend-paying company. Its forward annual dividend is $2.10, translating to a modest yield of 0.27%. 

While the yield is low compared to other income investments, the combination of dividend initiation, strong cash flows, and AI-driven growth gives me conviction that Meta can be a long-term compounder. So you could say this: Meta might not pay you much today, but it’s setting you up for tomorrow.