Not every company has quite a history as Meta Platforms (META 2.52%). Famously immortalized by the 2010 film, The Social Network (starring Jesse Eisenberg, Andrew Garfield, and Justin Timberlake), Meta Platforms counts more than 3.5 billion people among its daily active users across its family of apps.
CEO Mark Zuckerberg has never been one to rest on his laurels, though. The company, which changed its name from Facebook to Meta Platforms in 2021 to emphasize its focus on building the metaverse, is making massive investments in artificial intelligence and related infrastructure. As a result, the company's revenue numbers continue to climb, but there's some nervousness among bears that the company may be overspending.
This is the fifth installment in a series of seven articles that rank the best Magnificent Seven stocks to buy for 2026. In previous articles, I identified Apple as No. 7, Amazon as No. 6, Tesla as No. 5, and Microsoft in the No. 4 spot.
Meta Platforms is a deserving member of the Magnificent Seven, sporting a market capitalization of more than $1.6 trillion, to be one of the biggest publicly traded companies in the world. Let's take a closer look at why Meta is deserving of the No. 3 ranking on this list of best Magnificent Seven stocks to buy for 2026.
Image source: Getty Images.
Meta's spending creates upside, not risk
Zuckerberg knows that to make money, you have to spend money. And he's never been afraid to do that. Meta Platforms has recorded losses of $73 billion so far on its Reality Labs division, which is charged with building virtual reality and augmented reality hardware and software to support the metaverse.
I confess I never saw the appeal of the metaverse, so I was as relieved as anyone when Zuckerberg finally signaled a long-overdue pivot. According to Bloomberg, Meta is planning deep cuts in its Reality Labs division as the company pivots to developing artificial intelligence. Meta stock rose 4% on Bloomberg's early December report.
This time, I think that Zuckerberg is getting it right. Meta already has some massive platforms, including Facebook, Instagram, WhatsApp, and Messenger, that have huge followings and tons of engagement. With its Meta AI assistant, the company can deliver personalized content and ads, including those powered by generative AI tools. Meta's Llama large language model enables users to create and interact with AI personas, providing more engagement across its family of apps.
NASDAQ: META
Key Data Points
And Meta's AI tools are having an immediate impact on the company's bottom line. Revenue in the third quarter totaled $51.24 billion, up 26% from a year ago. Net income fell from $15.68 billion to $2.70 billion, but that was only because of a one-time, non-cash income tax charge of $15.93 billion that was required by the recently passed One Big Beautiful Bill Act. Meta says excluding the charge, income would have increased to $18.64 billion.
Notably, Meta recorded $50.08 billion in advertising revenue in the quarter, up from $39.88 billion a year ago.
"We are at an exciting point for our company, where we have continued runway to improve our core services today as well as the opportunity to build new AI-powered experiences and services that will transform how people engage with our products in the future," management said in the earnings report.
Why Meta is No. 3
Meta is investing heavily in AI, with capital expenditures for 2025 expected to range between $70 billion and $72 billion. And that number is expected to increase in 2026, according to Chief Financial Officer Susan Li. But while other companies may struggle with that, Meta's in great shape. It generated $44.8 billion in trailing free cash flow during the third quarter, giving it the resources to invest in AI.
Zuckerberg wants Meta's AI spending to lead to "personal superintelligence," which he describes as an AI companion that allows Meta's users to improve their relationships, automate work, encourage creativity, and help them achieve personal goals. That's an achievable goal, because that's how people are starting to use AI already.
Meta stock is down 13% in the last three months and has been underperforming the S&P 500 for most of the year. But I think the shares are on the verge of a rebound, and are now trading at a discounted price-to-earnings ratio of less than 30. I believe that Meta stock will be a big winner in 2026, and this is an ideal place to buy a Magnificent Seven stock at a discounted price.
