Meta Has a Plan to Monetize Its AI Investments. Its Underperforming Stock Needs It Badly.
With a year-to-date (YTD) loss of 4.66%, Meta Platforms (META) is underperforming the markets this year. Among its Magnificent 7 peers, only Microsoft (MSFT) has fared worse this year. Alphabet (GOOG) (GOOGL) is, meanwhile, the best-performing among the lot, a position the Google
With a year-to-date (YTD) loss of 4.66%, Meta Platforms (META) is underperforming the markets this year. Among its Magnificent 7 peers, only Microsoft (MSFT) has fared worse this year. Alphabet (GOOG) (GOOGL) is, meanwhile, the best-performing among the lot, a position the Google parent also held last year.
The divergence in price action among Big Tech companies can largely be attributed to market perceptions of their artificial intelligence (AI) initiatives. Alphabet proved critics wrong and is literally firing on all cylinders. The company’s core search and digital advertising business has managed to protect its turf from upstarts like OpenAI and its ad business is growing way faster than its two bigger competitors, namely Microsoft and Amazon (AMZN).
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As for Meta, its ad business has been doing remarkably well, and the company’s revenues rose by an impressive 33% year-over-year in Q1 2026, the highest growth since 2021. AI-powered personalized ads have been a key driver of that growth. For context, only Nvidia (NVDA) reported a higher growth in the most recent quarter, even though the reporting period is not similar for the two companies.
Other hyperscalers have sprawling cloud operations whose growth has been turbocharged due to strong demand for AI. The growing cloud revenues help tech giants validate their AI capex to some extent. Meta, however, does not have an in-house cloud business and has been struggling to justify its ever-rising capex, which stood between $125 billion and $145 billion at the last count. At the top end of that range, this year Meta would spend twice as much as it did in 2025, and while capex budgets of other hyperscalers are also facing scrutiny, markets have been particularly harsh on Meta amid concerns over the company’s ability to monetize these investments.
