---
title: "When others are fearful, I am greedy? The market does not buy into Meta's post-earnings report, but analysts point out that the hundred billion capital expenditure is precisely to build momentum for the future"
type: "News"
locale: "zh-CN"
url: "https://longbridge.com/zh-CN/news/265453032.md"
description: "After Meta released its third-quarter financial report, the market reacted excessively, causing the stock price to decline. Analyst Deep Value Investing believes that the company's fundamentals remain strong, capital expenditures are reasonable, and the stock price is expected to consolidate around $600, with the potential to reach historical highs in the next 3-6 months. Third-quarter revenue grew by 26% year-on-year, and advertising revenue continues to improve. Meta is currently undervalued, with a forward price-to-earnings ratio of 25.6 times. Analysts are optimistic about Meta's prospects, believing that the demand for computing power is reasonable"
datetime: "2025-11-12T06:59:03.000Z"
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  - [en](https://longbridge.com/en/news/265453032.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/265453032.md)
---

> 支持的语言: [English](https://longbridge.com/en/news/265453032.md) | [繁體中文](https://longbridge.com/zh-HK/news/265453032.md)


# When others are fearful, I am greedy? The market does not buy into Meta's post-earnings report, but analysts point out that the hundred billion capital expenditure is precisely to build momentum for the future

According to Zhitong Finance APP, after Meta (META.US) released its third-quarter financial report, the market reacted with widespread sell-offs. Financial analyst Deep Value Investing believes that the market's reaction is somewhat excessive, attributing the stock price decline to capital expenditures (capex) and stock repurchase policies, while the company's fundamentals remain robust. The spending on computing power is reasonable, and it is expected that Meta's stock price will consolidate around $600 for several weeks before potentially challenging historical highs within 3-6 months.

The analyst believes that there is a significant disconnect between Meta's fundamentals and stock price movements after the release of its third-quarter financial report for 2025. Prior to the report, he held an optimistic view on the stock, believing in its positive outlook, mainly due to the strong advancement of AI infrastructure construction in that quarter.

With the Chief Financial Officer having a clearer forecast for the year-end situation, capital expenditures may reach the midpoint of the expected range. However, since the last analysis, Meta's stock price has fallen by 15.6%.

He believes this is an overreaction by the market. Investors seem to be overly focused on the increase in infrastructure spending and the slowdown in stock repurchase pace, while neglecting the strong growth in operating cash flow this year. In the third quarter, Meta's revenue grew by 26% year-on-year to $51.24 billion, with fourth-quarter guidance of $56-59 billion.

Additionally, key metrics in the advertising business continue to improve (impressions increased by 14%, average ad prices rose by 10%), leading to an overall advertising revenue growth of 26%. In terms of valuation, Meta has now become the lowest-valued mega-cap technology company, with a forward price-to-earnings ratio of only 25.6 times.

He argues that the doubts regarding the use of Meta's computing power are unfounded. The demand for computing power at Meta arises from multiple aspects: training of the Llama large model, operation of the application ecosystem, and providing content and advertising services to core users. As long as the growth rate of the advertising business remains above 20%, these capital expenditures are justified. Furthermore, the company added $40 billion in third-party computing power contracts last quarter, which means that even with computing power redundancy, strong market demand can still enable external sales.

Overall, the analyst remains optimistic about Meta. He expects the stock price to consolidate around $600, with the potential to challenge historical highs in the next 3-6 months.

## Interpretation of the Reasons Behind the Stock Price Sell-off

Like most mega-cap technology companies, Meta's capital expenditure growth primarily relies on operating cash flow and cash reserves for self-financing.

The latest 10-Q filing shows that the company's operating cash flow reached $79.6 billion over the past three quarters (a year-on-year increase of 26%).

![META1.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20251112/1762929989577150.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)

During the same period, property and equipment procurement expenditures amounted to $48.3 billion, meaning that capital expenditures accounted for approximately 61% of operating cash flow. In comparison, Microsoft's ratio in the last quarter was about 43%, while Google's was 44% over the past three quarters Analysts say the market is in a panic because Meta has invested a large amount of operating cash flow into capital expenditures, and this proportion may increase next year. In the recent earnings call, the company raised its 2025 capital expenditure guidance from the previous $66-72 billion to $70-72 billion.

Additionally, management expects the absolute growth of capital expenditures in 2026 to be significantly higher than in 2025. Chief Financial Officer Susan Li stated in the meeting:

"Therefore, we currently expect the absolute growth of capital expenditures in 2026 to be significantly higher than in 2025. We also expect the year-on-year growth rate of total expenditures in 2026 to be significantly faster than in 2025, with growth mainly coming from infrastructure costs, including new cloud service expenditures and depreciation expenses."

Analysts believe this statement has caused some investors to feel concerned, leading to a sell-off in the stock price after the earnings report. In terms of stock buybacks, the company has repurchased $26.32 billion worth of stock over the past three quarters, with a remaining authorized amount of $25.03 billion.

![meta2.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20251112/1762929995417939.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)

The problem is that the company slowed down its buyback pace last quarter. As shown below, the number of shares repurchased during the July-September period continued to decrease, with no buybacks occurring in September.

![meta3.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20251112/1762930001967800.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)

This may be an early signal: the company may pause stock buybacks next year and instead invest cash into capital expenditures. This is the main reason for the panic sell-off after the earnings report.

As for the $15.93 billion one-time non-cash income tax benefit resulting from the valuation allowance for deferred tax assets under the new U.S. "Corporate Alternative Minimum Tax" (part of the OBBB Act), it is not overly concerning. This factor caused Meta's effective tax rate in the third quarter to rise to 87%, leading to a net profit that significantly missed expectations (diluted earnings per share under GAAP of $1.05, far below the market consensus of $6.67). Excluding this one-time impact, the adjusted earnings per share were $7.25, significantly exceeding Wall Street's expectations.

In terms of liquidity, as of the end of the last quarter, the company's cash and cash equivalents reached $44.45 billion. Additionally, after the earnings report, Meta announced the largest bond issuance plan in history: raising up to $30 billion through multiple issuances, with maturities ranging from 5 to 40 years. Meanwhile, the 10-Q document shows that the company signed a large third-party cloud service agreement last quarter:

"In October 2025, we signed a multi-year third-party cloud computing agreement with a total amount of approximately $40 billion."

Unfortunately, the company did not disclose the partner for this $40 billion agreement, but analysts say they would not be surprised if this scale of agreement was reached due to the Hyperion data center project

## Why Remain Optimistic

A common objection from skeptics regarding Meta is its lack of a cloud business. While this is indeed true, Meta has a strong advertising business, and to support the operation of this advertising business, sufficient computing power is essential. Therefore, the statement that "the computing power built by Meta is not for self-use" does not constitute a reasonable basis for a bearish outlook on the company.

The company's computing power is primarily used for its application ecosystem, especially for content recommendation and ad display. As shown below, the momentum for advertising revenue growth remains strong and has continued to accelerate since the beginning of the year.

![meta4.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20251112/1762930010923835.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)

Overall, advertising impressions increased by 14% year-on-year, and the average ad price also achieved a 10% year-on-year increase. It is worth noting that despite the rise in the unemployment rate in the U.S. this year, advertising pricing has remained resilient.

![meta5.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20251112/1762930016528807.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)

In terms of revenue, the revenue for the third quarter of 2025 reached $51.24 billion, a year-on-year increase of 26%. Management expects fourth-quarter revenue to be between $56 billion and $59 billion. Wall Street predicts that Meta's revenue growth rate will still exceed 20% year-on-year in the next two quarters before slowing down.

![meta6.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20251112/1762930022402835.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)

The slowdown in growth may be related to the deteriorating macroeconomic situation in the U.S., especially as the number of layoffs in October reached a 20-year high. This will be a key risk factor to monitor.

## Risk Warning and Valuation Analysis

Analysts state that they will closely monitor various signals that may lead to a decline in the return on capital expenditure investments. Specifically, if revenue growth fails to keep pace with the growth of spending/capital expenditures in 2026, the company's profit margins and free cash flow may be squeezed.

On the financing side, the $30 billion bond issuance is a double-edged sword. On one hand, it will inject more funds into data center construction; on the other hand, the interest payments to bondholders will increase interest expenses, thereby diluting profit margins.

Finally, the ratio of capital expenditure to operating cash flow will continue to be tracked. As mentioned earlier, Meta's ratio is the highest among large-scale tech companies, so if capital expenditure increases without a corresponding growth in operating cash flow, it may put greater downward pressure on the stock price.

![meta7.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20251112/1762930028539703.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) After the third-quarter earnings report, the stock price fell, making Meta currently the large-cap tech company with the lowest forward price-to-earnings ratio.

Compared to large-cap tech companies like Amazon that have cloud businesses, Wall Street's growth expectations for Meta are lower, but its forward price-to-earnings ratio is significantly higher at 25.6 times.

Overall, as the panic selling in the fourth quarter bottoms out, the company's valuation will be readjusted. At that time, it may be worth considering buying out-of-the-money (OTM) call options with expiration dates of 6-12 months.

## Future Outlook

From the stock price trend, the contrarian investment opportunity for this stock is particularly prominent.

The stock has a beta coefficient of 1.26. The "big short" Barry's shorting of Palantir and Nvidia has triggered market panic, compounded by recent comments from OpenAI's CFO about financing data center infrastructure through innovative means, further amplifying the stock price sell-off.

Analysts believe this stock is currently oversold, has attractive valuation, and is expected to maintain strong double-digit growth in the future. Although the company will increase capital expenditures next year, the returns from its application ecosystem business will outweigh these investments in the long run. Reiterating a "strong buy" rating for Meta

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