Meta Stock Drops on Capex Increase. Should You Buy the Dip?

Meta Platforms (META) stock crashed on Thursday as a massive increase in management’s capital expenditure outlook spooked investors, tempering the company’s solid Q1 earnings beat. 

The tech behemoth now sees its capex falling between $125 billion and $145 billion this year, up sharply from its previous guidance for a maximum of $135 billion. 

Following today’s decline, META stock is in the red again for the year, down about 5% versus the start of 2026. 

Why Is Rising Capex Bearish for Meta Stock?

For many investors, META’s aggressive spending feels more like a déjà vu.

It mirrors the giant’s 2022 pivot to the metaverse, when its stock cratered as Mark Zuckerberg funneled billions into that venture, which resulted in massive losses for its Reality Labs business. 

Sure, the current spend is focused on artificial intelligence (AI) infrastructure and the Muse family of large language models (LLMs) — the sheer scale of the investment is still raising red flags about long-term margins. 

Investors are bailing on META shares because they fear the titan is once again entering a cycle of over-investment where the return on capital is uncertain, particularly as competitive pressures from Google and Amazon intensify. 

META Shares Receive a Downgrade from JPMorgan

Meta’s capex guidance also prompted JPMorgan’s senior analyst Doug Anmuth to downgrade the stock this morning to “Neutral.”

Anmuth trimmed his price target on META stock as well to $725, citing concerns that the path to profitability for AI beyond advertising remains rather unclear. 

JPM’s bearish note highlighted an alarming trajectory for cash flow, projecting that the multinational could see $24 billion in negative free cash flow by 2027 if spending continues to scale at this pace. 

In his research note, Anmuth warned that until META provides clearer visibility into how its agentic AI offerings will generate incremental revenue, its share price will likely remain under pressure. 

Meta Remains Buy-Rated Among Wall Street Firms

Other Wall Street analysts, however, don’t agree with Doug Anmuth on Meta Platforms. 

According to Barchart, the consensus rating on META shares remains at “Strong Buy,” with the mean price target of about $854 indicating potential upside of more than 40% from current levels.