We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Meta Is a Good Bet Despite Huge AI Spending: ETFs in Focus
Read MoreHide Full Article
Key Takeaways
Meta plans a massive capital raise to fund its expanding AI infrastructure.
AI-driven advertising and agents offer long-term monetization potential.
ETFs provide diversified exposure as Meta's spending and valuation risks persist.
Meta Platforms (META - Free Report) is leaving no stone unturned in its efforts to raise funds for its AI ambitions. The company intends to raise up to $95 billion to finance its expanding AI program. NVIDIA (NVDA - Free Report) plans to invest $3 billion in Meta, as the social media giant ramps up its AI infrastructure spending through a massive fundraising plan.
The investment also underscores NVIDIA's close relationship with Meta, which relies on its chips to expand computing capacity and develop AI capabilities. NVIDIA said the companies would expand their work on Muse and the Muse family of models to improve training and inference performance, as reported by Yahoo Finance.
Meta Plans a Massive Capital Raise to Fund AI Expansion
Meta will begin with an initial $35 billion offering of common and preferred stock. The company said its major chip suppliers, NVIDIA, Advanced Micro Devices (AMD - Free Report) and Broadcom (AVGO - Free Report) , had expressed interest in purchasing up to $5 billion in aggregate equity.
Meta is also selling nearly $100 billion of stock to pay for AI, per Yahoo Finance. Meta priced $25 billion of regular stock at $625 a share, below the closing price on Oct. 23, 2026. Another $12.5 billion went into preferred stock that pays 6.5% and turns into common stock in 2029.
The biggest chunk, up to $60 billion, hasn't been sold yet. It's a new class of nonvoting stock that Meta plans to sell a little at a time starting next year.
The fundraising marks a shift for Meta, which has traditionally used advertising revenue to fund technology investments but is increasingly tapping capital markets to finance rising AI infrastructure costs.
AI Infrastructure Spending Is Pressuring Cash Flow
Meta now expects its full-year capex to range from $135 billion to $145 billion, raising the bottom of the range from $130 billion.
Debt Investors Signal Growing Concerns
The cost of insuring Meta's debt against default reportedly reached a record 127 basis points before easing, reflecting growing concern about its financial commitments, as mentioned on the same Yahoo Finance article.
Five-year credit default swaps trading around 120 basis points imply a higher perceived credit risk than a year ago. For Meta, if monetization falls short of expectations, negative free cash flow and increased financing requirements could weigh on the stock.
Why Meta Could Be a Good Bet Now
Despite the risks, Meta's established advertising business and expanding AI capabilities provide a potential foundation for long-term growth. The investment case rests on several factors.
AI could strengthen Meta's core advertising business: Meta's family of apps gives it a large audience and an established advertising platform. Better AI models could improve ad targeting, campaign performance, content recommendations and user engagement.
AI agents offer new monetization opportunities: Meta is developing AI products that could expand beyond traditional social networking. In September, Meta CEO Mark Zuckerberg outlined the company’s plans to monetize its rapidly growing Muse AI agent (read: Meta Maps Out Muse Monetization Strategy: Tap With ETFs or Stock?).
Decent Meta valuation: Meta’s Price-to-Free-Cash-Flow (P/FCF) ratio stood at 46.6X as of Sept. 24, 2026, in line with the underlying Computer Software Services industry. The stock trades at a forward P/E multiple of 21.45X versus 21.46X for the underlying industry.
However, Meta’s valuation looks pricey in terms of its price/sales ratio. The stock’s price/sales ratio stands at 6.65X, higher than the industry average of 3.30X.
Long-term monetization potential remains:: Wedbush described Muse monetization as a longer-term opportunity and said it is too early to estimate advertising and payments revenue with certainty, per MT Newswires, as reported by Yahoo Finance.
Note that four of 11 analysts upped Meta earnings estimates for the upcoming quarter over the past seven days while five cut the same. The Zacks Consensus Estimate for the December quarter has been upped by six cents to $8.13 over the past one month while the estimate stayed the same over the past one week.
Price Target
Based on estimates from 50 analysts, Meta Platforms has an average short-term price target of $857.58, ranging from $650 to $1,050. This implies 36% upside from its Oct. 26, 2026 closing price of $630.56.
Broker Rating
Meta Platforms has an average brokerage recommendation (ABR) of 1.29, unchanged from a month ago, based on 56 brokerage recommendations. Of these, 47 are Strong Buy and two are Buy, accounting for 83.93% and 3.57% of total recommendations, respectively.
Against this backdrop, investors can gain exposure to Meta through a basket approach using ETFs, as hurdles remain and the stock’s valuation is not particularly cheap. The basket approach can help reduce company-specific concentration risk.
Meta-heavy ETFs include the likes of Fidelity MSCI Communication Services Index ETF (FCOM - Free Report) , Global X PureCap MSCI Communication Services ETF (GXPC - Free Report) , Meta AI Lab Ecosystem ETF (MTAW - Free Report) , State Street Communication Services Select Sector SPDR ETF (XLC - Free Report) and Vanguard Communication Services ETF (VOX - Free Report) . Each of these ETFs allocates at least one-fifth of its portfolio to Meta shares.
View the Zacks #1 Rank List
Image: Bigstock
Why Meta Is a Good Bet Despite Huge AI Spending: ETFs in Focus
Key Takeaways
Meta Platforms (META - Free Report) is leaving no stone unturned in its efforts to raise funds for its AI ambitions. The company intends to raise up to $95 billion to finance its expanding AI program. NVIDIA (NVDA - Free Report) plans to invest $3 billion in Meta, as the social media giant ramps up its AI infrastructure spending through a massive fundraising plan.
The investment also underscores NVIDIA's close relationship with Meta, which relies on its chips to expand computing capacity and develop AI capabilities. NVIDIA said the companies would expand their work on Muse and the Muse family of models to improve training and inference performance, as reported by Yahoo Finance.
Meta Plans a Massive Capital Raise to Fund AI Expansion
Meta will begin with an initial $35 billion offering of common and preferred stock. The company said its major chip suppliers, NVIDIA, Advanced Micro Devices (AMD - Free Report) and Broadcom (AVGO - Free Report) , had expressed interest in purchasing up to $5 billion in aggregate equity.
Meta is also selling nearly $100 billion of stock to pay for AI, per Yahoo Finance. Meta priced $25 billion of regular stock at $625 a share, below the closing price on Oct. 23, 2026. Another $12.5 billion went into preferred stock that pays 6.5% and turns into common stock in 2029.
The biggest chunk, up to $60 billion, hasn't been sold yet. It's a new class of nonvoting stock that Meta plans to sell a little at a time starting next year.
The fundraising marks a shift for Meta, which has traditionally used advertising revenue to fund technology investments but is increasingly tapping capital markets to finance rising AI infrastructure costs.
AI Infrastructure Spending Is Pressuring Cash Flow
Meta's AI ambitions come with a substantial financial burden. The company’s free cash flow went into negative territory for the first time since 2012, according to the supplied report, and mentioned on Yahoo Finance.
Meta now expects its full-year capex to range from $135 billion to $145 billion, raising the bottom of the range from $130 billion.
Debt Investors Signal Growing Concerns
The cost of insuring Meta's debt against default reportedly reached a record 127 basis points before easing, reflecting growing concern about its financial commitments, as mentioned on the same Yahoo Finance article.
Five-year credit default swaps trading around 120 basis points imply a higher perceived credit risk than a year ago. For Meta, if monetization falls short of expectations, negative free cash flow and increased financing requirements could weigh on the stock.
Why Meta Could Be a Good Bet Now
Despite the risks, Meta's established advertising business and expanding AI capabilities provide a potential foundation for long-term growth. The investment case rests on several factors.
AI could strengthen Meta's core advertising business: Meta's family of apps gives it a large audience and an established advertising platform. Better AI models could improve ad targeting, campaign performance, content recommendations and user engagement.
AI agents offer new monetization opportunities: Meta is developing AI products that could expand beyond traditional social networking. In September, Meta CEO Mark Zuckerberg outlined the company’s plans to monetize its rapidly growing Muse AI agent (read: Meta Maps Out Muse Monetization Strategy: Tap With ETFs or Stock?).
Decent Meta valuation: Meta’s Price-to-Free-Cash-Flow (P/FCF) ratio stood at 46.6X as of Sept. 24, 2026, in line with the underlying Computer Software Services industry. The stock trades at a forward P/E multiple of 21.45X versus 21.46X for the underlying industry.
However, Meta’s valuation looks pricey in terms of its price/sales ratio. The stock’s price/sales ratio stands at 6.65X, higher than the industry average of 3.30X.
Long-term monetization potential remains:: Wedbush described Muse monetization as a longer-term opportunity and said it is too early to estimate advertising and payments revenue with certainty, per MT Newswires, as reported by Yahoo Finance.
Note that four of 11 analysts upped Meta earnings estimates for the upcoming quarter over the past seven days while five cut the same. The Zacks Consensus Estimate for the December quarter has been upped by six cents to $8.13 over the past one month while the estimate stayed the same over the past one week.
Price Target
Based on estimates from 50 analysts, Meta Platforms has an average short-term price target of $857.58, ranging from $650 to $1,050. This implies 36% upside from its Oct. 26, 2026 closing price of $630.56.
Broker Rating
Meta Platforms has an average brokerage recommendation (ABR) of 1.29, unchanged from a month ago, based on 56 brokerage recommendations. Of these, 47 are Strong Buy and two are Buy, accounting for 83.93% and 3.57% of total recommendations, respectively.
Meta shares have a strong Momentum Score of A and a Growth Score of B.
ETF Picks
Against this backdrop, investors can gain exposure to Meta through a basket approach using ETFs, as hurdles remain and the stock’s valuation is not particularly cheap. The basket approach can help reduce company-specific concentration risk.
Meta-heavy ETFs include the likes of Fidelity MSCI Communication Services Index ETF (FCOM - Free Report) , Global X PureCap MSCI Communication Services ETF (GXPC - Free Report) , Meta AI Lab Ecosystem ETF (MTAW - Free Report) , State Street Communication Services Select Sector SPDR ETF (XLC - Free Report) and Vanguard Communication Services ETF (VOX - Free Report) . Each of these ETFs allocates at least one-fifth of its portfolio to Meta shares.