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Meta Platforms Bets Big on AI Data Centers: Is More Growth Ahead?
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Key Takeaways
Meta Platforms is expanding AI data center capacity to support advanced models and global AI services.
BlackRock partnerships and sites in El Paso and Alberta aim to accelerate infrastructure growth.
More compute is improving engagement, ad conversions and monetization across Meta's platforms.
Meta Platforms (META - Free Report) expanding data center footprint is strengthening its long-term prospects by providing the compute capacity required to train increasingly advanced AI models and deploy inference-intensive services at a global scale. The company is substantially expanding owned and leased facilities while securing third-party cloud capacity that will come online progressively through 2026 and 2027. These investments are expected to ease current compute constraints, accelerate model development and support personal and business AI agents, Meta AI, next-generation recommendation systems and other AI experiences for billions of users.
Meta is also pursuing capital partnerships to accelerate expansion while retaining strategic flexibility. The company’s venture with BlackRock will develop a 1-gigawatt data center campus in El Paso, expected to begin bringing capacity online in 2028, while a separate 1-gigawatt facility in Alberta will expand its global AI-optimized fleet. The El Paso campus will support AI model development and core-business enhancements, with BlackRock providing capital and infrastructure-financing expertise. This financing approach should help Meta build capacity faster and at greater scale, although rising depreciation, operating costs and infrastructure spending remain near-term margin risks. Meta expects 2026 capital expenditures of $125-$145 billion, including additional data center costs for future capacity.
The infrastructure buildout is expected to enhance Meta’s core advertising business. Greater compute availability enables the company to use larger and more predictive models for content ranking, ad recommendations and real-time inference. These capabilities are already improving engagement and advertiser returns, with AI-led ranking enhancements lifting Reels time spent and video watch time, while advanced advertising models have increased conversion rates. The company’s initiative to expand data center capacity is expected to help Meta scale these improvements across Facebook, Instagram, WhatsApp and Threads, supporting higher engagement, stronger ad performance and increased monetization over time.
In the first quarter of 2026, ad impressions increased 19% year over year, supported by user growth, stronger engagement and ad-load optimization. The average price per ad also rose 12%, reflecting improved ad performance, healthier advertiser demand and favorable currency movements. The Zacks Consensus Estimate for Meta’s second-quarter advertising revenues is pegged at $59.035 billion, indicating growth of 26.8% year over year.
META Faces Tough Competition in the Ad Space
Meta Platforms is facing stiff competition from the likes of Alphabet (GOOGL - Free Report) and Amazon (AMZN - Free Report) in the ad domain.
Alphabet is intensifying competition with Meta for digital advertising budgets by combining the high-intent nature of Google Search with AI-powered targeting, creative generation and campaign automation. Gemini is being deployed across Google’s advertising infrastructure to improve query understanding, ad relevance and advertiser returns. The technology helps Google interpret longer and more detailed searches that were previously difficult to monetize, while shopping-ad improvements generated a 20% increase in highly relevant ad placements. This strengthens Alphabet’s ability to capture performance-ad spending that might otherwise flow to Meta’s Facebook and Instagram platforms.
Amazon’s advertising business continues rapid expansion as brands allocate more marketing budgets to its platform, leveraging its valuable consumer data and purchase intent signals. Advertising services revenues jumped 24% year over year to $17.2 billion in the first quarter of 2026, and advertising revenues grew to more than $70 billion in trailing-12-month revenues, reflecting successful AI-powered optimization of the platform and growing market share in digital advertising.
Meta Platforms shares have dropped 10.1% year to date, underperforming the broader Zacks Computer and Technology sector’s return of 9.5%.
META Stock’s Price Performance
Image Source: Zacks Investment Research
Meta Platforms stock is trading at a premium, with a forward 12-month price/sales of 5.32X compared with the Zacks Internet Software industry’s 3.81X. META has a Value Score of C.
META’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2026 earnings is pegged at $33.11 per share, up 0.3% over the past 30 days, suggesting 41% year-over-year growth.
View the Zacks #1 Rank List
Image: Bigstock
Meta Platforms Bets Big on AI Data Centers: Is More Growth Ahead?
Key Takeaways
Meta Platforms (META - Free Report) expanding data center footprint is strengthening its long-term prospects by providing the compute capacity required to train increasingly advanced AI models and deploy inference-intensive services at a global scale. The company is substantially expanding owned and leased facilities while securing third-party cloud capacity that will come online progressively through 2026 and 2027. These investments are expected to ease current compute constraints, accelerate model development and support personal and business AI agents, Meta AI, next-generation recommendation systems and other AI experiences for billions of users.
Meta is also pursuing capital partnerships to accelerate expansion while retaining strategic flexibility. The company’s venture with BlackRock will develop a 1-gigawatt data center campus in El Paso, expected to begin bringing capacity online in 2028, while a separate 1-gigawatt facility in Alberta will expand its global AI-optimized fleet. The El Paso campus will support AI model development and core-business enhancements, with BlackRock providing capital and infrastructure-financing expertise. This financing approach should help Meta build capacity faster and at greater scale, although rising depreciation, operating costs and infrastructure spending remain near-term margin risks. Meta expects 2026 capital expenditures of $125-$145 billion, including additional data center costs for future capacity.
The infrastructure buildout is expected to enhance Meta’s core advertising business. Greater compute availability enables the company to use larger and more predictive models for content ranking, ad recommendations and real-time inference. These capabilities are already improving engagement and advertiser returns, with AI-led ranking enhancements lifting Reels time spent and video watch time, while advanced advertising models have increased conversion rates. The company’s initiative to expand data center capacity is expected to help Meta scale these improvements across Facebook, Instagram, WhatsApp and Threads, supporting higher engagement, stronger ad performance and increased monetization over time.
In the first quarter of 2026, ad impressions increased 19% year over year, supported by user growth, stronger engagement and ad-load optimization. The average price per ad also rose 12%, reflecting improved ad performance, healthier advertiser demand and favorable currency movements. The Zacks Consensus Estimate for Meta’s second-quarter advertising revenues is pegged at $59.035 billion, indicating growth of 26.8% year over year.
META Faces Tough Competition in the Ad Space
Meta Platforms is facing stiff competition from the likes of Alphabet (GOOGL - Free Report) and Amazon (AMZN - Free Report) in the ad domain.
Alphabet is intensifying competition with Meta for digital advertising budgets by combining the high-intent nature of Google Search with AI-powered targeting, creative generation and campaign automation. Gemini is being deployed across Google’s advertising infrastructure to improve query understanding, ad relevance and advertiser returns. The technology helps Google interpret longer and more detailed searches that were previously difficult to monetize, while shopping-ad improvements generated a 20% increase in highly relevant ad placements. This strengthens Alphabet’s ability to capture performance-ad spending that might otherwise flow to Meta’s Facebook and Instagram platforms.
Amazon’s advertising business continues rapid expansion as brands allocate more marketing budgets to its platform, leveraging its valuable consumer data and purchase intent signals. Advertising services revenues jumped 24% year over year to $17.2 billion in the first quarter of 2026, and advertising revenues grew to more than $70 billion in trailing-12-month revenues, reflecting successful AI-powered optimization of the platform and growing market share in digital advertising.
META’s Share Price Performance, Valuation & Estimates
Meta Platforms shares have dropped 10.1% year to date, underperforming the broader Zacks Computer and Technology sector’s return of 9.5%.
META Stock’s Price Performance
Image Source: Zacks Investment Research
Meta Platforms stock is trading at a premium, with a forward 12-month price/sales of 5.32X compared with the Zacks Internet Software industry’s 3.81X. META has a Value Score of C.
META’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2026 earnings is pegged at $33.11 per share, up 0.3% over the past 30 days, suggesting 41% year-over-year growth.
Meta Platforms, Inc. Price and Consensus
Meta Platforms, Inc. price-consensus-chart | Meta Platforms, Inc. Quote
Meta Platforms currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.