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Meta (META) presents a compelling buy at $675 after pulling back 9% from peak.

Meta’s advertising engine accelerates with 24% year-over-year revenue growth and strong AI-driven product improvements.

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Meta Platforms (NASDAQ:META) presents a compelling case for investors at $675. The stock has pulled back around 9% from its year-to-date (YTD) high despite delivering a clear beat on both top and bottom lines in its latest earnings report. But since its YTD low on March 27, the stock is up more than 28%.

Meta operates the world's largest social media ecosystem, spanning Facebook, Instagram, Messenger, WhatsApp, Threads and Meta Quest. Its advertising engine generated $58.1 billion in Q4 2025 ad revenue, up 24% year over year, while 3.58 billion people used at least one Meta app daily. The stock traded near $713 at the Q4 earnings filing and has since drifted lower as investors digest aggressive 2026 spending guidance.

The bull case rests on advertising growth that continues to compound. Ad impressions rose 18% year over year in Q4, while average price per ad climbed 6%. Full-year 2025 revenue reached $200.97 billion, up 22%. Management guided Q1 2026 revenue of $53.5 to $56.5 billion, embedding accelerated growth supported by roughly 4% foreign currency tailwind.

READ: The analyst who called NVIDIA in 2010 just named his top 10 AI stocks

Valuation is compelling for this business quality. The stock trades at a trailing P/E of 27x and a forward P/E of 21x, with a PEG ratio of just 0.84. That multiple is reasonable for a company with 30% profit margin and a return on equity of 30%. With 61 of 67 analysts rating the stock a Buy or Strong Buy and zero Sell ratings, institutional conviction remains high.

The bear argument centers on capital discipline. Meta guided 2026 capital expenditures of $115 to $135 billion, up from $69.7 billion in 2025. That step-up is enormous and already compressing returns. Operating margin fell to 41% in Q4 from 48% a year earlier, and full-year free cash flow declined 19% even as operating cash flow grew. Reality Labs burned through $19.2 billion in operating losses in 2025 with no clear path to profitability.

Insider behavior adds caution. COO Javier Olivan and CFO Susan Li both executed systematic selling throughout the pullback from $714 to $605, and the dataset shows zero discretionary open-market purchases during the entire period. Regulatory risk compounds the picture, with EU less-personalized-ads requirements rolling out this quarter and multiple U.S. youth-litigation trials scheduled for 2026.

The hold case acknowledges Meta's core business is healthy but argues the spending trajectory creates genuine uncertainty in forward earnings. Management says 2026 operating income will exceed 2025 levels, but the $115 billion to $135 billion capex range is wide enough to produce very different free cash flow outcomes. Investors wanting clearer visibility have reason to wait for Q1 2026 results, expected around April 28, before sizing a position.

Meta trades near $675, below its 200-day moving average of $683 and well off its 52-week high of $796.25. The consensus analyst target is $855.68 across 67 analysts, implying meaningful upside, though targets are directional signals rather than guarantees. The AI-model base case sits at $763.82. YTD, Meta has returned nearly 4%, underperforming the broader market. Over 12 months the stock is up more than 29%.

Analyst ratings breakdown:

Strong Buy: 11

Buy: 50

Hold: 6

Sell: 0

The pullback from the post-earnings high has created a gap between price and fundamental value. A forward P/E of 21x on a business growing revenue at 24% year over year, with a PEG ratio below 1, is not stretched. The capex surge is real, but management committed to delivering higher operating income in 2026 than in 2025, and AI investments are already producing gains: a 3% lift in Instagram conversion rates from a new runtime model and a 12% improvement in Facebook ad quality in Q4 alone.

The key near-term catalyst is Q1 2026 earnings. If Meta delivers within or above guided revenue and shows operating margin stabilization, the stock has a credible path toward $700 and beyond. The thesis breaks if capex lands at the high end while revenue disappoints, confirming AI spending is dilutive rather than accretive. Watch operating margin and free cash flow conversion closely.

At a price 21% below the 52-week high and trading at a sub-1 PEG ratio, risk/reward tilts positive for those willing to hold through near-term noise. The world's largest digital advertising platform, growing at scale with AI infrastructure already improving core product performance, does not stay at 21x forward earnings for long.

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