Meta (META) Downgraded as Rising AI Capex Limits Upside, Analysts Say

Meta Platforms, Inc. (NASDAQ:META) is one of the Trending AI Stocks on Wall Street. On November 10, Erste Group downgraded the stock to “Hold” from buy driven by higher AI capex and reduced buybacks, limiting valuation despite strong fundamentals.

According to the firm, there may be a significant acceleration in 2026 spending to support Meta’s AI ambitions and growth in capital expenditure will also be “significantly higher” in 2026 than in 2025.

The firm sees limited upside potential at the current valuation level due to the need for a high level of investment for infrastructure capacity, including computing and cloud costs.

“For 2026, the company anticipates a significant acceleration in spending to support its AI ambitions. Growth in capital expenditure is expected to be significantly higher in 2026 than in 2025. The main reasons for this increase are the need for infrastructure capacity, including computing and cloud costs. Asset turnover (the ratio of revenue to assets) is expected to fall further. Share buy-backs have also recently decreased significantly. This trend will continue due to the high level of investment required. We therefore see limited upside potential at the current valuation level. Hold.”

Meta Platforms has been expanding its advertising capabilities and also invests heavily in artificial intelligence and the metaverse.

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