Why is Meta Stock Falling Despite Earnings Beat?

Just days ago, Meta’s earnings looked like a victory lap. Revenues surged, user growth stayed strong, and advertising continued to defy sceptics. Yet, instead of celebrating, markets hit the sell button. 

Over the last five trading sessions, Meta stock has fallen around 8% according to Google Finance, catching many investors off guard. So what gives? How does a company post one of its strongest quarters in years and still see its share price slide?

Let’s break down what’s really driving the fall in Meta stock price, separating headline fear from structural reality.

Why is Meta Stock Falling?

On paper, Meta’s latest numbers were hard to fault. For Q4 2025, Meta Platforms reported revenue of nearly $60 billion, up about 24% year-on-year, driven by resilient ad demand across Facebook, Instagram and WhatsApp. Daily active users touched 3.58 billion, reinforcing Meta’s unmatched scale.

But markets don’t price stocks on what just happened. They price them on what comes next. And what came next, during the earnings call, was a very large number.

Meta guided for 2026 capital expenditure of $115–$135 billion, primarily towards AI infrastructure, custom chips, and data centres. That figure was well above what the market had mentally pencilled in. The immediate takeaway for investors wasn’t growth. It was a cash burn.

Operating margins, already down from last year, are expected to remain under pressure as spending ramps up. For a stock that had rallied strongly over the past year, this was enough to trigger profit-taking.

1. Meta AI Ambition Is Clear But Payoff Is Not

Mark Zuckerberg has made it clear that Meta wants to be all-in on AI. From improving ad targeting to building large-scale generative models and long-term “personal AI” experiences, the ambition is unquestionable.

The concern is timing. AI investments don’t deliver linear returns. The spending hits upfront, while monetisation often arrives in phases and sometimes years later. Even though AI is already improving ad performance, investors are struggling to quantify how soon these massive infrastructure investments translate into incremental cash flows.

As analysts quoted by Bloomberg and Reuters have pointed out, Meta is no longer being judged just as an advertising company. It is increasingly being valued as a capital-intensive AI platform, and that changes the risk-reward equation.

That shift alone explains much of the recent weakness in Meta share price.

2. Margin Pressure on Meta Stock

For most of 2023 and 2024, Meta earned investor goodwill by aggressively cutting costs. That “year of efficiency” narrative played a big role in the stock’s rally. Now, the pendulum has swung again.

Higher depreciation, rising energy costs from data centres, and increased headcount for AI teams mean margins may stay compressed longer than previously expected. Even if revenues keep growing, profitability growth could slow.

Markets tend to punish uncertainty more than bad news. And right now, margin visibility is the biggest grey area.

This Isn’t Just About Meta

It’s also worth zooming out. Early February 2026 saw broader weakness across large-cap technology stocks. Investors rotated away from names that had run up sharply and carried high future expectations.

In that environment, Meta’s heavy AI spending made it an easy candidate for short-term de-risking. In other words, part of the fall in Meta shares has little to do with Meta specifically. It’s about portfolio positioning.

Analyst Tone Has Turned Cautious on Meta Stock

Another subtle but important factor is how analyst language has evolved. Brokerages haven’t turned negative on Meta’s business. Instead, many have shifted from aggressive upside calls to more balanced commentary, highlighting execution risks and near-term valuation limits.

That change in tone alone can move stocks. When expectations reset, prices follow. According to INDmoney’s consensus of 69 analysts, 88.4% still have a 'BUY' rating for Meta Stock With an average target price of $859.85.

Meta Fundamentals vs Sentiment: A Familiar Story

Here’s the cleanest way to frame what’s happening:

• The business is performing well
• The strategy is bold and expensive
• The market is recalibrating how much certainty it demands

Short-term price action reflects sentiment and positioning, not a breakdown in Meta’s core engine.

What Should Investors Take Away?

For investors tracking Meta stock price, this correction offers clarity:

• Short-term volatility is being driven by spending visibility, not demand weakness
• Long-term value depends on how efficiently Meta converts AI scale into profits
• The stock is transitioning from an efficiency story to an execution story

Whether this dip becomes an opportunity or a warning depends entirely on your time horizon. For now, markets are asking a fair question: can Meta spend at this scale without sacrificing returns? The answer won’t come in one quarter. Until it does, expect volatility to remain part of the ride for Meta stock.

Disclaimer:

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