META Stock Rout Deepens Overnight On Capex Woes — Analysts, Retail Bulls Still Back Mag 7’s Cheapest AI Bet

• CFO Susan Li said the higher capex guidance comes amid rising memory costs and expanded data center investment.
• Despite the selloff, analyst Gary Black said that most unit-level operating metrics exceeded expectations.
• Investor caution also reflects ongoing losses at Meta’s Reality Labs unit, which reported another $4 billion in quarterly operating loss.

Shares of Meta Platforms, Inc. (META) slid more than 7% in overnight trading on Thursday after the company raised its capex outlook for this year, even as several analysts and retail investors argued that the sell-off overlooked strong engagement and early momentum from its latest AI rollout.

META stock is poised to record its best month in a year. On Wednesday, shares fell 0.3% to end at 66.12 and fell 7% in extended trading after releasing their quarterly results. 

META Selloff Looks Overdone 

Meta projected 2026 capex in the range of $125 billion to $145 billion, up from its earlier forecast of $115 billion to $135 billion, as part of its push to scale infrastructure for rising AI needs. The higher spending outlook overshadowed solid results across advertising, engagement and AI product development.

CFO Susan Li said on the company’s earnings call that the updated outlook was driven primarily by higher memory prices and additional data center costs required to support future model training and inference capacity.

However, Future Fund Managing Partner Gary Black said on X that Meta “shouldn’t be down” following the updated capex guidance, as most unit-level operating metrics across the business came in ahead of expectations.

Analyst Sees Hidden Strength In META Usage 

Concerns around user activity were also tempered after Meta attributed the decline in daily active users to internet disruptions in Iran and restrictions on WhatsApp access in Russia. However, CEO Mark Zuckerberg said that trends on Instagram and Facebook remained strong despite the disruptions, with video continuing to drive record engagement on both platforms.

Deepwater Management founder Gene Munster said on X that the estimated growth would likely have been closer to 5.5% after adjusting for the geopolitical disruptions. 

Munster also pointed to early engagement improvements from Meta’s latest AI model rollout, saying that Meta’s Muse Spark model is already improving user sessions by a “double-digit” percentage. Launched earlier this month, Muse Spark is Meta’s first AI model from its new Meta Superintelligence Labs and powers its Meta AI assistant, recommendation and engagement features across its apps.

“AI is going to make it even more difficult for humanity to put down their screens,” Munster added. 

Reality Labs Burn Raises Investor Concerns 

Investor caution around Meta’s rising capex has also been spurred by continued losses and restructuring within its Reality Labs unit, which houses the company’s virtual reality and hardware initiatives.

The segment reported another $4 billion operating loss in the first quarter, extending cumulative losses to roughly $83 billion since 2020. Charlie Bilello, director of research at Pension Partners, weighed in on losses at Reality Labs and said on X, “We've never seen a public company light money on fire to this extent.”

The losses come alongside broader restructuring inside the division. Meta slashed over 1,000 Reality Labs roles earlier this year and followed that with additional layoffs affecting several hundred employees last month across hardware, recruiting and sales teams as resources were redirected toward AI infrastructure and wearable technologies.

Munster said that Zuckerberg is “trying to smooth over the fact that Meta has been the most aggressive company at replacing humans with AI.” He estimated that the company has cut 15% of its headcount over the past year.

How Do Retail Traders Feel About META?

On Stocktwits, retail sentiment for META jumped to ‘extremely bullish’ from ‘neutral’ levels after the results, amid nearly a 600% surge in 24-hour message volume.

One user noted that Meta has “much lower PE than other Mag 7, and the only company shown it has profitable AI spend.”

Meta’s valuation also remains the most attractive within the “Magnificent Seven” peer group, with the stock trading at a forward P/E of about 22.1x, below Microsoft's 24.2x and Amazon's about 33.9x.

Another user echoed a similar sentiment, saying, “580-590. Buy zone. Best valued faang.”

META stock has risen 1.4% so far this year and is up 21% over the past 12 months. 

For updates and corrections, email newsroom[at]stocktwits[dot]com.

Read Next: ASTS, RKLB, FLY, LUNR Rise Overnight: Amazon Validates 'Very Large' Demand For Phone-To-Space Connectivity