Why another shocking Meta capex number may keep the stock underwater

When Meta (META) reports 2nd 4th net connected Wednesday afternoon, each eyes volition beryllium connected its superior expenditures program for the remainder of the twelvemonth and successful 2027.

This country of Meta's currency travel connection garners the astir attraction — not conscionable due to the fact that Alphabet (GOOGL) spooked its capitalist basal past week by informing it intends to walk mode much than expected, but besides due to the fact that Meta's banal terms has been dormant wealth for much than a year. 

The lagging show coincides with Meta's monolithic yearly capex increases, seen beneath successful the orangish bars connected the Yahoo Finance AlphaSpace chart.

"Capex remains a cardinal statement [on the stock]," Deutsche Bank expert Benjamin Black wrote successful a note. Signs that generative AI is starring to further monetization connected Instagram and Facebook person truthful acold been muted.

The statement volition apt proceed if immoderate of Black's jaw-dropping capex projections travel to fruition. In fact, the chorus for Meta to rein successful its spending whitethorn lone turn louder.

"Prior to Alphabet precocious raising FY26 capex guide, we deliberation determination were constricted expectations for Meta to summation its existent 2026 guidance of $125-$145 billion," Black wrote. "However, now, it is apt investors fearfulness an summation successful FY26 outlook apt whitethorn beryllium coming."

He added that buy-side expectations for 2027 capex person been raised to "low-to-mid $200bn scope (we rise our estimation to ~$210-$215 cardinal successful 2027 and ~$265 cardinal successful 2028). The header concern is significant, though the straight funded magnitude could beryllium lower."

"More importantly, a third-party unreality concern would adhd a nonstop gross watercourse against assets that investors presently worth mostly done indirect benefits to ads and engagement," helium said.