Why Zuckerberg’s AI Wager Makes META Platforms Stock a Conviction Buy

Mark Zuckerberg remains a polarizing figure, but investor sentiment often shifts quickly when Meta Platforms (META) reports quarterly results. I’ve held the stock through multiple sharp drawdowns over the years—without seriously considering selling—and time and again it has recovered strongly, even as skepticism persists.

When you focus on the fundamentals and the meaningful strategic transformation underway in Menlo Park, the outlook appears increasingly compelling from current levels—particularly in light of the stock’s relatively subdued performance in recent months. As a result, I plan to continue building my position gradually with confidence.

Trimming the Metaverse Drag: Reality Labs and the New Discipline

For years, Reality Labs was the “black hole” of Meta’s balance sheet, a place where capital went to die in pursuit of a digital utopia that felt perpetually five years away. But the narrative shifted dramatically this month. In a move that signaled the end of the “blank check” era, Meta decided to move forward with slashing roughly 10% of its Reality Labs workforce, about 1,500 jobs. They are also pulling the plug on several high-profile VR projects and game studios. We saw the closure of studios like Twisted Pixel and Sanzaru Games, along with a significant slowdown in the ambitious expansion of Horizon Worlds.

The math here is brutal. Since 2021, Reality Labs has racked up massive cumulative losses exceeding $73 billion. That is more than the entire market capitalization of some S&P 500 stalwarts. By finally starting to “trim the fat” and acknowledging that fully immersive VR is a longer play than originally marketed, Meta is reducing the drag that the market has been, after all, begging for. This seems to be the case to ensure that the metaverse doesn’t cannibalize the company’s future while it waits for the hardware to catch up with the vision.

Fueling the Superintelligence Machine: Capital Reallocation in the AI Era

So, does that mean Meta’s heavy spending will unwind? Hardly the case. It’s being poured into one of the most aggressive AI buildouts the world has ever seen. The capital once reserved for legless avatars is now flowing into “superintelligence” labs and a tremendous data-center expansion. We are looking at a 2026 capex acceleration that is essentially a bet-the-company move on frontier models and AI-integrated hardware.

The success of the Ray-Ban Meta glasses, which, by the way, have seen sales 3X over the last year, proves that Mr. Zuckerberg’s “AI-first” hardware strategy is actually working. By shrinking the Reality Labs burn rate and focusing on AI glasses that people actually want to wear, I believe Meta could position itself for massive margin expansion. As the infrastructure matures, the efficiency gains from their ad-targeting algorithms alone are enough to drive a stronger EPS growth outlook than most analysts currently model.

So when I buy META stock, beyond the social media business, I am also getting a global AI infrastructure play that is already cash flow positive.

A Valuation Too Appealing to Ignore

Now, apart from all the positive business developments, the primary reason to be bullish on META stock, in my view, is the valuation, which is, frankly, absurd. As the company prepares to report its Q4 and full-year 2025 results next week, the street is expecting an EPS of $25.79. I firmly believe they will beat that number, given the holiday ad spend and the efficiency of their new AI-driven ad tools.

Looking ahead to 2026, the consensus EPS estimate stands at $30.38. Even if we use that fairly modest figure, in my view, Meta is trading at a forward P/E of just 20. Think about that for a second. You are getting a company that continues to compound revenues at 20%+ while sitting on a core ad business that is the undisputed king of the digital world.

At this point, it’s a typical cycle. The market spends a year or two hating Meta for its “excessive” spending, then realizes the company is an essential utility for every small business on the planet, and the stock comes back harder than before. If you understand Meta’s critical role in the global economy, a forward P/E of 20, along with such a strong growth/profitability combo, feels like a gift worth buying every single time.

Is META a Good Stock to Buy?

On Wall Street, META stock features a Strong Buy consensus rating, based on 37 Buy, six Hold, and one Sell rating. Notably, META’s average stock price target of $821.33 implies ~33% upside potential over the next 12 months.

See more META analyst ratings

Underperforming Stock With Strengthening Fundamentals

Meta’s stock performance has been underwhelming—there’s no denying that. But the core bull thesis remains intact. The business is still growing, and importantly, it’s doing so with strong profitability.

At the same time, management is making decisive strategic moves. Scaling back the metaverse emphasis while aggressively investing in AI infrastructure represents a clear pivot—and it appears to be the right one. Zuckerberg is positioning Meta to compete in the next decade of compute-intensive platforms. And at roughly 20x forward earnings, the potential upside is difficult to ignore.