Meta Platforms Rises 12% in 3 Months: Buy, Sell, or Hold the Stock? Nilanshi Mukherjee Tue, October 13, 2026 at 10:50 AM EDT 6 min read META +2.46% AMZN +0.41% GOOG +0.71% RDDT -0.50% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
Meta Platforms META shares have rallied 12.4% in the past three-month period, outperforming the broader Zacks Computer & Technology sector's return of 5.8%.The company's shares have also outperformed its peers, which include Reddit RDDT, Amazon AMZN and Alphabet GOOGL. All three companies are expanding their footprints in the advertising space. While Reddit and Alphabet shares have lost 21.3% and 1.9%, respectively, Amazon shares have risen 4.9% in the past three-month period.The outperformance can be attributed to robust advertising demand, AI-driven improvements in ad targeting and content recommendations, and growing user engagement across Facebook, Instagram and WhatsApp. Expanding adoption of Advantage+ advertising solutions and AI-powered creative tools is further supporting growth. The launch of Muse also remains a key catalyst. These factors are helping Meta Platforms fend off its competitors like Reddit, Amazon and Alphabet.
Meta Platforms' strong growth in the advertising business has been noteworthy. The company's focus on integrating AI into its platforms — Facebook, WhatsApp, Instagram, Messenger and Threads — is driving user and advertising engagement. In the second quarter of 2026, Meta Platforms reported $59.4 billion in ad revenues, up 27% year over year, with a 14% increase in ad impressions and a 12% rise in average price per ad.AI is heavily dependent on data, of which META has a trove, driven by its more than 3.6 billion daily users. Instagram reached 2 billion daily active users and Threads surpassed 500 million monthly active users in the second quarter of 2026. AI-powered recommendation and ranking systems are also strengthening engagement across META's platforms. Instagram time spent grew double digits year over year, while Facebook video time spent increased 9% globally. Meta Platforms is using large language models (LLMs) to better understand content and user preferences, enabling more personalized recommendations across Feed and Reels.In the second quarter of 2026, the deployment of Meta Generative Recommender and other advanced models led to an 8.3% increase in ad clicks and a 15.7% uplift in conversions on Facebook. More than 9 million small businesses now use at least one of Meta Platforms' AI-powered ad creative tools. Early LLM-powered initiatives also drove a 1% increase in app event conversions on Instagram. Its Advantage+ AI-powered advertising solutions also surpassed a $75 billion annual revenue run rate in the second quarter of 2026, highlighting growing advertiser adoption.
Meta Platforms is benefiting from the expansion of its Muse AI model portfolio, which is further strengthening user engagement, advertising efficiency, and AI monetization opportunities. The company's Muse Spark 1.1 model offers advanced agentic capabilities, including computer use, tool use, and multimodal understanding. Following the integration of Muse Spark into Meta AI, daily interactions with the assistant increased 60%, reflecting growing adoption.Further expanding its Muse AI portfolio, META recently introduced Muse Wonder and Muse Wonder Full, its most advanced AI models, designed for complex agentic tasks across finance, law, health and coding. Built on Muse Spark, the models feature Active Memory for retaining relevant information across conversations and Active Focus for handling complex tasks and recovering from errors. Muse Wonder is available through the Meta Model API and Muse Code, with broader Muse integration planned.
Despite strong advertising growth and expanding AI capabilities, Meta Platforms faces challenges from rising infrastructure investments, higher operating expenses and regulatory uncertainties. In the second quarter of 2026, total expenses surged 55% year over year to $42 billion, while operating income declined 8%. Higher AI talent costs, infrastructure spending and legal charges are pressuring profitability. In second-quarter 2026, capital expenditures jumped to $31.08 billion from $17.01 billion in the year-ago period, while free cash flow plunged to just $784 million from $8.55 billion.The company now expects 2026 capital expenditures of $130-$145 billion as META builds servers, data centers and network infrastructure to support AI. The balance sheet quality also deteriorated, with long-term debt increasing to $83.66 billion as of June 30, 2026, from $58.74 billion at the end of 2025. Meta Platforms issued nearly $25 billion of long-term debt during the first half of 2026.Stiff competition from AI agents like Google's Gemini, OpenAI's ChatGPT, Apple's AI ecosystem, and other emerging agent platforms also remains a headwind for META's AI agents.
Meta Platforms' strong advertising momentum and expanding AI capabilities support its growth outlook, but rising infrastructure costs, margin pressures and stiff competition remain a concern. For the third quarter of 2026, Meta Platforms expects revenues between $61 billion and $64 billion. The forecast assumes foreign currency will create an approximately 1% headwind to year-over-year revenue growth.The Zacks Consensus Estimate for the third quarter of 2026 revenues is pegged at $63.18 billion, suggesting a year-over-year increase of 23.30%.The Zacks Consensus Estimate for third-quarter 2026 earnings is pegged at $6.39 per share, up 0.94% over the past 30 days, suggesting an 11.86% decline from the figure reported in the year-ago quarter.
Meta Platforms, Inc. price-consensus-chart | Meta Platforms, Inc. Quote
Meta Platforms shares are trading at a premium, as suggested by the Value Score of C. In terms of the forward 12-month price/sales, META is trading at 6.41X, higher than the broader Computer & Technology sector's 6.05X.
Meta Platforms' strong advertising momentum, AI-driven engagement and expanding Muse portfolio support its long-term growth prospects. However, rising infrastructure costs, margin pressures and stiff competition remain headwinds. Stretched valuation also remains a concern. Investors may consider holding META shares until AI investments translate into stronger earnings growth and profitability.Meta Platforms currently has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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