But with the index now brushing record highs and valuations looking stretched in places, how much higher can it realistically go?

Here’s what the experts think.

The latest forecasts

The general consensus from most institutional analysts is the S&P 500’s actually still on track to climb even higher, albeit modestly.

Right now the index is sitting close to 7,500 points. But according to a Reuters poll across 47 analysts, the median price forecast for the US flagship index is 7,620 – around 2% higher than current levels.

In terms of money, that means a £1,000 investment today could only grow to around £1,020 over the next six months, which is pretty underwhelming.

However, while index investors might not have a thriving time for the rest of 2026, the same isn’t the case for stock pickers. In fact, even in today’s elevated market environment, there are still plenty of US stocks that look primed to thrive. And right now, there’s one S&P 500 stock in particular that many institutional analysts are backing.

Which stock should investors be watching?

Meta Platforms (NASDAQ:META) is currently trading around $600 a share. Yet looking at the latest analyst forecasts, the average consensus suggests that number should be much closer to $825. That’s a roughly 37.5% projected capital gain – enough to turn £1,000 into £1,375 if these projections prove accurate.

So what’s driving this bullish sentiment? In short: AI monetisation.

In Meta’s most recent quarter, new AI-powered ad tools drove a 3% increase in conversion rates and a 12% improvement in ad quality.

For advertisers, that’s a substantial increase in the value proposition of advertising on Meta’s various platforms such as Facebook, WhatsApp, and Instagram. And this steady improvement in advertising effectiveness is a big reason why click-to-message ads in the US grew more than 50% in 2025, while WhatsApp paid messaging crossed a $2bn annual run rate.

With momentum still building, it’s easy to understand the optimism. However, even the bulls have some reservations.

AI might be delivering results, but it’s coming at an enormous cost. Capital expenditure for 2026 is guided at $115bn-$135bn – nearly double last year’s pace. And if AI earnings take longer to materialise than expected, the near-term pressure on margins may not prove to be temporary after all.

So the question now is: is this a risk worth taking?

The bottom line

With indices concentrated and valuations stretched, we’re very much in a stock-picker’s market right now. And while Meta certainly isn’t the only S&P 500 stock for investors to explore, it does present a potentially compelling case for investors seeking exposure to this part of the tech sector.

That’s why I think it deserves a closer look.

Should you invest £5,000 in Meta Platforms right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Meta Platforms made the list?

Zaven Boyrazian does not hold any positions in the companies mentioned.

The post Up 10.6% in 6 months, where’s the S&P 500 going throughout the rest of 2026? appeared first on The Twelfth Magpie.

In a week when World Cup organisers discovered what happens when demand meets a heatwave, Meta has quietly admitted $125bn-$145bn for 2026 might be more computing power than it needs.

What’s the news?

The positive view is that ‘Meta Compute’ is a shrewd new cloud business to rival Amazon’s AWS and Microsoft’s Azure. The less polite one is that Meta has overspent again. 

When a firm commits $600bn to US infrastructure through 2028 and then starts renting out excess capacity, the question becomes whether compute demand is sustainable. And that’s a huge question in today’s stock market.

The market has already hinted at an answer. Data centre names have been sliding for weeks, and Meta’s announcement accelerated things. CoreWeave fell 13.9% in a day and sits 38% below its May high, while Nebius dropped 17%. Awkwardly, both count Meta as a flagship customer.

CoreWeave has a $21bn commitment from the company, Nebius up to $27bn. A landlord whose biggest tenant starts subletting should worry.

Investors are watching the details

American investor Michael Burry has been sceptical of the data centre boom. His charge is that hyperscalers are inflating earnings by extending chip depreciation schedules in an unjustified way. 

His estimate: a collective $176bn understatement of depreciation between 2026 and 2028, with Meta’s earnings overstated by 20.8% by 2028. And it’s not just Meta – similar points are true of Amazon and Microsoft.

Is Burry right? The counterargument is that older chips are holding their value better than before, as evidenced by higher rental prices:

• H100 rental prices have risen roughly 40% since October 2025, from about $1.70 to $2.35 an hour — the opposite of depreciation.
• Memory prices have gone parabolic, with DDR5 contract prices tracking towards 5x year-on-year increases.

The trouble is that this effect can also happen in reverse. If compute demand falls, older chip prices fall, depreciation schedules suddenly look generous, and those flattered earnings deflate.

Extended depreciation schedules mean the stakes are high precisely because the accounting only works while the party continues. And Meta might be the first sign that it isn’t going to last forever.

A crash warning?

Meta’s view for some time has been that the risk of underinvestment is greater than the risk of overinvestment. So the latest news shouldn’t be a huge surprise.

It’s also worth noting that it has had some genuine success with its products. Over 4m advertisers now use its AI tools and its AI agents are showing real signs of progress. 

The latest news doesn’t mean a crash is coming. But it’s a reminder to be wary of stocks priced as though the good times last forever.

Meta isn’t on my Buy list right now – I’m focusing on other opportunities. And in most cases, those are businesses that don’t need an adjusted depreciation schedule for the numbers to stack up.

Should you invest £5,000 in Meta Platforms right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Meta Platforms made the list?

Stephen Wright owns shares in Amazon and Microsoft.

The post Meta’s AI plans just sent the stock market a $145bn message — and investors should read it twice appeared first on The Twelfth Magpie.

Is it time to add this ‘Magnificent 7’ name to my ISA? Let’s discuss.

Meta looks cheap

Meta shares do look cheap right now. With analysts expecting earnings per share of $32.90 for 2026, we’re looking at a price-to-earnings (P/E) ratio of just 17. That’s a low earnings multiple for a Mag 7 company. It’s actually below the US market average.

So there appears to be some value on offer at first glance. Especially when you consider this company’s dominance in the social media space.

The valuation also looks low relative to the expected level of growth here. This year, analysts expect revenue to come in at around $253bn – an increase of 26% year on year.

What’s the market telling us?

Of course, when a stock has a low valuation, it’s worth digging deeper to find out why. Because a low multiple can signal that the market sees some risks or red flags.

In this case, I see a few issues. For a start, there’s the fact that Meta’s spending money at an unprecedented scale in an effort to become more of an AI company.

This year, it’s expected to spend up to $145bn. The problem is that there’s no guarantee this will pay off in the long run as no one really knows how the AI revolution will play out.

One thing to note here is that unlike other Mag 7 companies such as Amazon and Alphabet, Meta doesn’t offer cloud computing services. This puts it at a major disadvantage.

Because when these other businesses spend tens of billions of dollars buying Nvidia or AMD GPUs or building data centres, they can absorb the blow by renting out their compute power to enterprise customers at a premium. Meta isn’t able to do this.

More uncertainty

Another issue is that regulators are massively cracking down on the company’s social media platforms. For example, here in the UK, the government recently announced that from spring 2027, under-16s will no longer be able to use Facebook and Instagram.

Other countries that have made the same move or are thinking about doing so include Australia, Indonesia, France, and Spain. So this issue can’t be ignored – it could have an impact on the company’s growth.

Finally, there’s the fact that Meta’s facing thousands of lawsuits. These are mainly related to child safety and platform addictiveness. I don’t expect them to wipe the company out given how much cash flow it generates. But they do add some uncertainty.

The bull case

So there are quite a few issues to be aware of here. Ultimately, things look a bit messy at the moment.

That said, on the plus side, we have a company that is:

• Led by a founder with a great track record.
• One of the biggest players in the fast-growing digital advertising market.
• Using AI across its platforms very effectively today.
• Launching new AI services and tools.

So there are definitely reasons to be bullish.

Will I buy?

For me though, the negative issues highlighted above outweigh the bull case. So I’m not going to buy the stock today. Others might see things differently though. For contrarian investors, the shares might be worth considering.

Should you invest £5,000 in Meta Platforms right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Meta Platforms made the list?

Edward Sheldon owns shares in Nvidia, Amazon, and Alphabet

The post Down 30%, is this a rare chance to buy Meta stock cheaply for my ISA? appeared first on The Twelfth Magpie.

The company, however, just unveiled its new AI agents. So is this the moment the stock market has been waiting for?

AI strategies

AI has been the stock market’s main focus recently. And investors have been wary of Meta’s approach.

Alphabet, Amazon, and Microsoft have been spending heavily on data centres. And it looks like those investments are paying off.

Apple has taken a different approach. It isn’t selling computing power, but it’s also avoided the massive setup costs.

Meta, however, seems to have the worst of both worlds. It’s been spending heavily on data centres, but it isn’t making sales to customers.

The firm has been using its huge computing power internally. So investors have been wary of the risk that this won’t pay off.

Meta’s AI agents

In that context, Meta’s new AI agents are hugely important. They represent the firm’s way to make a return on around $90bn of investments.

What do they do? In short, they’re designed to speak to users across Meta’s social media platforms on behalf of advertisers.

They can close sales, manage bookings, and create reports for managers. And companies can build and deploy these agents themselves.

When you click on an advert on Facebook, it won’t just take you to a company’s site. It’ll open a WhatsApp chat with an AI agent.

It’s a big change. And it might give Meta shareholders something they’ve wanted for a long time – a monetisation strategy for WhatsApp.

Will anyone use them?

Meta’s AI agents look like a powerful tool. But there are some open questions to think about.

Even the best AI models are currently prone to hallucinations. So who’s responsible if – or when – mistakes happen?

The obvious answer is the advertiser. Meta can probably build this into its terms of service, but that comes at a cost. That gets Meta off the hook. But it makes the AI agents much less attractive to customers.

This has been a key question about AI agents. Will companies actually be willing to take the risk on them?

What does the future look like?

One interesting case is RWS. It’s a translation business, which is one of the things AI can clearly do well.

RWS focuses on things like medical instructions and patent documents. In these cases, there’s a lot at stake if things go wrong.

Despite this, the firm has been losing ground to AI translators. It’s been relegated from creating documents to correcting errors.

That might be how Meta’s agents work. Even with a manual final check, AI might handle most of the interaction.

In that case, there might still be value for businesses. But despite the stock market’s positive reaction, there’s still a lot to think about.

The start of a comeback?

Meta’s approach to AI has seen its share price falter, but it’s showing signs of paying off. It’s making real products that can add value for customers.

There are still other risks with the company. Top of these is the ongoing lawsuits concerning the addictive nature of its platforms.

Nonetheless, the new AI agents look like a really promising development. So investors might want to take another look at the stock.

Should you invest £5,000 in Meta Platforms right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Meta Platforms made the list?

Stephen Wright owns shares in Amazon and Microsoft.

The post Are Meta shares at the start of a comeback? appeared first on The Twelfth Magpie.

Could Meta Platforms (NASDAQ: META) stock be a good option for my portfolio after its 9% fall on Thursday (30 April)? Let’s discuss.

The bull case for Meta stock

At first glance, Meta has a lot going for it right now. For a start, there’s a high level of growth. For the first quarter of 2026, the company’s revenue amounted to $56.3bn, up 33% year on year. Meanwhile, net income was $26.8bn, up 61%. Second, we have profitability. Last year, the company’s return on capital employed was about 26%, which is high.

Additionally, we have a founder-led company. History shows that these are often good investments in the long run because founders tend to make decisions with long-term growth in mind.

I’ll point out here that CEO Mark Zuckerberg has shown the ability to adapt to technological shifts successfully (eg Facebook’s shift to mobile). He’s also shown the ability to buy good companies cheaply (eg Instagram and WhatsApp).

Finally, there’s the fact that the company’s already using artificial intelligence (AI) very effectively. Not only has the technology improved ad performance but it has also enhanced engagement with platform users.

It’s worth noting that looking ahead, Zuckerberg has big plans on the AI front. “We’re on track to deliver personal superintelligence to billions of people,” he said in the Q1 earnings.

As for the valuation, it looks very reasonable. After the recent share price fall, the forward-looking price-to-earnings (P/E) ratio is only 22.

Multiple red flags?

Digging deeper though, there are a few issues with this Magnificent 7 company from an investment perspective. One is the fact that the company’s spending an enormous amount of money on AI.

In its earnings call this week, it said that total expenses for the year are expected to be $162bn-$169bn. That’s far more than the company made in profit last year (its net profit was about $60bn).

Can we be sure that this spending will pay off? No, and that’s why the stock tanked on Thursday – there’s quite a bit of uncertainty here.

Another issue is the business model. Today, Meta’s business model is mainly built around serving up ads to ‘doom scrollers’. I’m not convinced that this is a strong business model. To my mind, companies like Alphabet, Amazon, and Microsoft have far better business models (note that all of these companies offer cloud computing services to businesses and Meta doesn’t).

Finally, broker sentiment isn’t the strongest at the moment. While the average price target ($855) is well above the current share price, brokers have been lowering their price targets since the Q1 earnings report. That’s not ideal – this kind of activity tends to put pressure on a stock.

Will I buy?

Weighing this all up, I won’t be buying Meta stock for my SIPP right now. It could end up doing well in the years ahead, but to my mind, there are better opportunities in the market for me right now.

The post Should I buy Meta stock for my SIPP after its 9% fall? appeared first on The Twelfth Magpie.

Sales increased 33% and earnings per share were up 63%. So what did the stock market not like – and what should investors do?

Earnings overview

There are a few things investors need to note about Meta’s Q1 earnings. Let’s start at the bottom and work our way up.

The 63% increase in earnings per share was driven partly by a tax benefit, which I don’t expect to repeat. But there’s plenty to like further up. 

There’s nothing one-off about the 33% increases in sales. This was driven by the firm’s social media platforms, which continue to do well.

The number of users keeps climbing. And Meta is also finding ways to get more advertising revenues from its existing user base.

All of this is positive. But there are two major reasons the stock fell meaningfully in extended trading – and both are familiar.

One is an increase in expected capital expenditures. And the other is the potential implications of its recent legal difficulties.

Why is the stock down?

Meta increased its capital expenditure forecast for 2026 to $145bn from $125bn. That’s a bold move in a market wary about the long-term demand for data centres.

My view, however, is that investors don’t have a huge amount to worry about here. The key is that the advertising revenues are continuing to grow strongly. 

This is what allowed the firm to keep moving forward while burning cash on metaverse projects. And I think it will offer a form of protection again.

The bigger concern, in my view, is the ongoing legal issues. Meta lost a couple of cases earlier this year and there are more scheduled. 

The company warned that these might result in a material loss. And that’s something that does make me wary as an investor. 

It’s not just the potential costs that concern me. It’s a threat to Meta’s social media business – which I see as fundamental to the data centre spending.

Risk assessment

Meta shares trade at a lower price-to-earnings (P/E) multiple than the other big US tech stocks. But I’m very wary of the current risks.

I think investors often underestimate legal threats when it comes to companies like Meta. And they have some justification. 

Alphabet was found guilty of maintaining an illegal monopoly. But in the end, the company escaped any major sanctions. 

I’m not convinced Meta is the same. Young people’s online safety is a subject that a lot of individuals — rightly — feel strongly about.

As a result, I’m taking a cautious view of the stock right now. I doubt it’s going to be fatal to the firm, but I think it’s very hard to assess it accurately.

This means me buying the stock right now looks more like gambling to me than investing. And that’s not what I’m in the stock market for. 

What to do?

Not buying Meta shares at today’s prices might turn out to be my mistake. But it’s one I can live with in my own investing. 

The stock might be down, but that doesn’t automatically make it a buy. For my money, some of the other big US tech stocks are more compelling right now.

The post Meta stock falls after Q1 earnings! What should investors do? appeared first on The Twelfth Magpie.

Many tech shares have taken a beating lately. In fact, a couple look like they’ve gone a few rounds with a prime Mike Tyson!

Take Meta, for example, which has fallen 23% since August. It now has a forward price-to-earnings (P/E) ratio of 19. At first glance, that just looks too low.

I mean, it’s far cheaper than other well-known S&P 500 blue-chips such as Walmart (42), Costco (50), Caterpillar (31), Netflix (31), and even McDonald’s (23). And next to Tesla and Palantir, Meta looks like a deep-value tech stock.

So should I invest in the social media giant?

High-margin machine

As most will be aware, Meta’s the company behind Facebook, Messenger, Instagram, and WhatsApp. Between them, these platforms have an astonishing 3.58bn user worldwide. Meta also sells VR headsets and AI smart glasses.

The company is a cash machine, with most of its revenue coming from high-margin digital advertising. Meta’s gross and operating margins are 82% and 41% respectively.

Looking out to 2028 forecasts, the forward-looking P/E drops to around 15. This is the type of multiple I’d expect to see from a mature, slow-growth company. Yet Meta’s net income’s expected to top $100bn by then, up from $60.5bn last year.

Plus, there appears to be a ton of long-term growth left in the tank. For example, Meta’s now actively monetising WhatsApp by charging businesses to send users messages and facilitate chats, potentially turning the app into a major revenue generator.

It’s also introducing ads inside WhatsApp, though wisely keeping them away from users’ private inboxes to avoid annoying them. 

Meanwhile, the core Facebook and Instagram ad businesses should continue growing, as AI power is enhancing targeted ads and making them more valuable. Last year, average price per ad increased 9%.

On top of this, Meta’s other big bets it’s working on that could drive big growth in future. These include AI agents, AI ‘superintelligence’, and smart glasses (which CEO Mark Zuckerberg thinks could eventually replace smartphones).

AI slop

Then again, these bets might not pay off. In 2026, Meta anticipates capital expenditures of $115bn-$135bn, with most going on its Meta Superintelligence Labs projects. It’s also started using debt to finance the AI infrastructure buildout.

Another developing risk is more countries banning kids from using social media, with Greece recently following Australia’s lead. This trend could see its Instagram and Facebook user base diminish.

Indeed, more people are associating social media with tobacco, in terms of its addictiveness. That’s not a great association from a business (and valuation) perspective. It may even face lots more litigation.

Another worry I have is the growing amount of AI-generated content (particularly AI slop) on its platforms. If users feel like they’re just interacting with fake images rather than real people, they might start spending less time on the apps.

My decision

But Meta stock looks undervalued, so investors may want to take a closer look at it. However, due to the worries I’ve outlined, I’m not going to invest. Fortunately, there are plenty of other opportunities out there right now.

The post Down 23%! Should I buy Meta Platforms for my ISA or SIPP? appeared first on The Twelfth Magpie.

As a result, the stock is trading at a forward price-to-earnings (P/E) ratio of 15. That’s unusually low – but is it an opportunity or a trap?

Why is the stock falling?

There are a few things weighing on the Meta share price right now. But the most significant might be a pair of court rulings against the firm.

One states that the firm knowingly misled parents about the safety of its social media apps. That’s a potentially huge issue.

The case cost Meta around $381m, which isn’t a lot by itself. But the number of similar cases means this could rise sharply.

Another ruling states that the firm has designed addictive products that caused harm to young people. That’s another big concern.

The risk is that Meta might have to make substantial changes to its social media apps. And this could reduce its appeal to advertisers.

The legal issues aren’t the only reasons the stock fell 12.5% in March. But I think they’re the biggest threat in the equation going forward.

A buying opportunity?

Historically, legal challenges have presented investors with the chance to buy stocks like Meta. That might be concerning in some ways, but it’s true.

Most recently, it’s been true of Alphabet. The company was found guilty last year of illegally maintaining a monopoly. 

Despite this, the firm escaped serious structural damage. And the share price is up 65% in the last 12 months as a result.

Meta also has its own history. The most obvious example is the Cambridge Analytica issues around privacy from 2019. 

The company settled the cases (without admitting guilt) and the stock fell 39% as a result. But it’s now 320% off its lows.

There’s no denying that past legal issues have presented chances to be greedy when others are fearful. But investors need to tread carefully.

Risks and rewards

Buying shares in a company that’s facing legal troubles is always risky. And there’s a lot of uncertainty around Meta’s position.

It’s easy and natural to dismiss the potential risk as something that won’t happen. Especially when the consequences could be huge. 

Alphabet last year is a good example. The company avoided the worst-case outcome, but I don’t think the market really took the threat seriously.

From what I saw, a lot of investors dismissed the possibility without having much reason for doing so. And that’s incredibly dangerous. 

Good investors don’t do this. They think carefully about the potential threats and work out how significant they might be.

With Meta, that’s exceptionally difficult to do at the moment. But that might just mean the falling share price isn’t a buying opportunity.

The rules of investing

Investors looking to be greedy when others are fearful always need to ask one question: what do they know that others don’t?

With Meta, they need an insight into why the likely outcome of the legal issues is more positive than the market thinks. And that needs to be an informed view. 

If I’m honest with myself, I don’t have this, so I’m not buying the stock. But there are plenty of other names I’m more positive about.

The post Why Meta Platforms shares fell 12.5% in March appeared first on The Twelfth Magpie.

Is it time to buy this Magnificent 7 name for my portfolio? Let’s take a look at the set-up.

Looking cheap today

Meta certainly looks cheap right now. With analysts expecting earnings per share of $29.80 this year and $34.40 next, we’re looking at price-to-earnings (P/E) ratios of 18.4 and 15.9 on a forward-looking basis.

These are low valuations for a Magnificent 7 stock. Especially when you consider the growth that Meta is anticipated to generate in the coming years.

This year, revenue is projected to climb about 25% year on year to $250bn. Next year, analysts expect $296bn (+18%).

As for earnings per share, we’re looking at growth of about 27% this year and 15% next. If we take that expected earnings growth figure for 2026 and compare it to the P/E ratio, we get a price-to-earnings-to-growth (PEG) ratio of just 0.7 (a ratio under one typically signals that a stock is undervalued).

An AI winner?

Looking beyond the valuation, Meta has big plans for the future. While the company is known for its social media platforms today, it’s likely to be more of an AI business down the track.

Meta’s aim is to build a ‘superintelligence’ platform and give people access to powerful AI tools that can empower them to achieve unprecedented productivity. Ultimately, its goal is to become an indispensable utility in the AI era.

To do this, it’s investing billions in AI infrastructure (data centres, chips, nuclear power, etc). It’s also focusing on products such as large language models (Llama) and smart glasses.

So, there’s a long-term growth story here. If the world continues to adopt AI, Meta could potentially get much bigger.

Big risks for investors

While this all sounds exciting, there are quite a few risks to the investment case (in both the short term and the long term). In the short term, the company is facing a high level of regulatory/legal scrutiny due to the addictive nature of its platforms.

The reason the share price dropped yesterday was that the company lost a court case in relation to social media harm. Experts believe that this could open it up to a wave of litigation (which could potentially impact its profits and cash flows significantly).

Meanwhile, in the long run, we don’t know if Meta’s huge investments in AI (it plans to spend up to $135bn this year) will actually pay off. The company is going to have a lot of competition in this space and at this stage, no one knows exactly how AI will play out.

One other thing to mention is that the share price chart looks terrible. Right now, the stock is in a nasty downtrend and buying may be akin to trying to catch a falling knife.

Better opportunities in the market?

Weighing this all up, I’m not going to buy Meta stock for my portfolio right now. In my view, it’s too risky.

I think there are better opportunities for me in the market at the moment.

The post Down 31%, is this a rare chance to buy Meta stock for my ISA cheaply? appeared first on The Twelfth Magpie.

When they’re not watching oil prices, investors are trying to figure out artificial intelligence (AI). And Meta is an interesting case study.

Horizon Worlds

One of Meta’s recent ventures is Horizon Worlds. For those that haven’t heard of it (lucky them) it’s a sort of metaverse game.

The company announced that it was shutting the project down, before changing its mind almost immediately. But that’s not important.

The point is that Meta has lost a lot of money a lot on the metaverse since 2021. The total is around $84bn in operating income. 

The thing is, though, the stock has done really well – handily outperforming the S&P 500 since 2021. And the reason is simple.

Source: Fiscal.ai

The metaverse project has been an almost total failure. But Meta’s social media platforms have been absolutely sensational.

Since 2021, they’ve generated enough high-margin revenue to take operating profits from $46bn to $83bn. That’s why the stock is up.

I think the lesson here is that a company with terrific core assets can withstand big mistakes. And that feels very relevant in today’s stock market.

Artificial intelligence

Investors are currently wary of companies spending big on AI. There’s a real risk these won’t work. 

Two good examples are Amazon (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT). The stock market has reacted badly to their plans to keep investing through 2026.

The question is how investors should assess that risk. And I think the example of Meta is an instructive one. 

Both Amazon and Microsoft plan to spend north of $100bn in 2026. But they also have quality businesses behind them.

Amazon has AWS – its cloud computing division – and a growing advertising business. Both of these generate high-margin revenues. 

Microsoft also has a cloud business – Azure – and a huge enterprise software unit. And those are extremely impressive operations.

None of this means AI investments are going to work out for either company. But I think it means the risk might be worth it for investors.

Risk taking

Amazon and Microsoft are used to taking risks that don’t ultimately work. Both companies have tried to launch smartphones – and neither succeeded.

There are plenty more examples of unsuccessful ventures. Despite this, both stocks have been terrific investments until recently.

The proposed AI spending is on another level. But Horizon Worlds shows that more money doesn’t guarantee success.

It’s really hard to know if the latest investments are going to work. So investors can’t afford to just ignore the inherent risks.

Fortunately, I don’t think they need to. In my view, there’s a good chance both stocks do well even if the AI investments don’t.

This is why I see both stocks as buying opportunities worth considering right now. In my own portfolio, I’ve been focusing on Microsoft.

The only reason for this is that Amazon is already a big part of my portfolio. So I’m looking to add to the company I own less of.

The bottom line

Can both stocks fall further from their current levels? Absolutely – that happened to Meta in 2022. 

Will their strong operations ultimately come to the fore the way Meta’s did? My view is that this is also likely.

The post £10,000 invested in Meta Platforms Stock 5 years ago is now worth… appeared first on The Twelfth Magpie.