Meta Stock: Why It Gave Up Earnings Gains & If It’s Still a Buy

Meta Stock Erases Post-Earnings Gains Amid Broader Tech Pullback

Meta Platforms stock ((META 3.24%)) has relinquished all of the gains it experienced following its fourth-quarter earnings report, falling approximately 10% from its closing price on January 29, 2026.

The decline mirrors a broader pullback in the technology sector, particularly impacting software and artificial intelligence (AI) focused companies. The Nasdaq Composite is down roughly 3.5% during the same period.

Strong Business Momentum, But AI Investments Come at a Cost

Meta’s fourth-quarter revenue reached $59.9 billion, a 24% increase year-over-year, exceeding analyst expectations of $58.5 billion. Earnings per share also surpassed forecasts, landing at $8.88.

The company reported 3.58 billion daily active users across its platforms, a 7% year-over-year increase. Ad impressions rose by 18% year-over-year, driven by user growth and engagement. Management anticipates continued strong growth, with first-quarter revenue projected to increase by 30% year-over-year, even excluding a 4% foreign currency tailwind.

However, this growth is accompanied by significant investment in AI. Meta’s costs and expenses increased 40% year-over-year in the fourth quarter. Operating margins decreased from 48% in the year-ago period to 41%, resulting in an 11% year-over-year increase in earnings per share – less than half the rate of revenue growth.

Looking ahead, Meta expects full-year 2026 operating income to be “above” 2025 levels, signaling a continued period of heavy investment. Capital expenditures are projected to be between $115 billion and $135 billion for the full year, up from approximately $72 billion in 2025. Total expenses are forecast to range from $162 billion to $169 billion, compared to $118 billion in 2025.

Zuckerberg’s AI Bet

Meta founder and CEO Mark Zuckerberg described 2026 as a year of “major AI acceleration” during the company’s fourth-quarter earnings call. The company is heavily investing to capitalize on this trend.

Is Meta Stock a Buy Now?

Despite the recent decline, analysts suggest that Meta remains a potentially attractive long-term investment. However, the company’s substantial AI investments and the resulting impact on near-term operating margins introduce a degree of risk.

As of today, February 5, 2026, Meta is trading at a price-to-earnings ratio of approximately 28. While this valuation appears to factor in the associated risks, the stock is not inexpensive. Investors considering a purchase should be confident in Zuckerberg’s AI strategy, as its success is crucial for future performance.