Should You Buy Meta Platforms Stock Below $600 Before Mark Zuckerberg Unveils Its AI Cloud Business? Here's My Honest Take

Meta Platforms (META) is investing heavily in AI, but the market has not rewarded these efforts. In 2009, a similar signal flashed for Nvidia, a chipmaker, which is now 1/100th the size of Meta. Zuckerberg and his team are considering selling Meta's compute power in a new AI cloud business. Last quarter, Meta spent $30 billion on capital expenditures, with a projected $130 billion to $145 billion for the full year.

Some of this will be used for advertising, while the majority will go toward frontier research and inference capacity for AI models. Meta's AI models are not seeing much external use, leading to excess data center capacity. Other AI companies have reached out to Meta to buy access to its compute capacity at a premium. However, Meta is struggling to find internal use cases for its AI infrastructure, similar to SpaceX, CoreWeave, and Nebius Group.

If Meta were to sell these services, it would be a bearish signal. Meta's AI chatbots have a small market share, lagging behind competitors like Alphabet's Gemini, OpenAI's ChatGPT, and Anthropic's Claude. Despite spending billions on AI, Meta's advertising business, which includes Facebook, Instagram, and WhatsApp, is seeing growth due to improved targeting technologies.

However, Meta's operating earnings fell last quarter, and earnings before interest and taxes (EBIT) are likely to continue falling over the next few years if capital expenditures continue without an AI business model. The stock trades at a discount to many big technology peers, with a P/E ratio of 22. While Meta's advertising revenue is growing quickly, it cannot keep up with rising expenses.

Meta's P/E ratio is lower than many big technology peers, but Wall Street is bearish on Meta's AI investments. The stock may be a better buy elsewhere, as indicated by The Motley Fool's Stock Advisor, which identified 10 better stocks for investment in 2026.