Meta (META) is facing growing skepticism from Wall Street, with prominent analysts expressing concern that its aggressive investment trajectory in Artificial Intelligence (AI) could severely damage profitability in the short to medium term. In a significant move, Oppenheimer downgraded the stock’s rating, joining a broader market anxiety over the uncertainty surrounding the giant expenditures.

Growing Skepticism: Is AI the New Metaverse?

The central concern highlighted by analysts is the company’s inability to justify the massive AI spending with clear revenue opportunities. Oppenheimer notes that the significant investment in “Superintelligence” mirrors the Metaverse spending that characterized previous years. Investors are struggling to accept a “science fiction investment” that does not present a clear monetization model. Management signaled a “significantly faster” increase in operating expenses and capital expenditures (CapEx) for 2026, much higher than Wall Street’s original forecasts. The projected OpEx and CapEx for the fourth quarter exceeded market expectations. Wells Fargo emphasizes that Meta is not generating revenue by renting out GPUs to customers like Google or Microsoft, and it lacks a clear, near-term monetization pathway for its AI solutions.

Direct Impact on the Bottom Line and Valuation

The high expenditures are expected to directly impact the company’s Earnings Per Share (EPS) over the coming years. Wells Fargo notes that the 2026 EPS outlook is now trending lower than the high range previously expected. Early chatter regarding 2027 earnings is also moving toward a lower mid-range. Oppenheimer expresses frustration over the lack of rationale provided for the anticipated deceleration in fourth-quarter advertising revenue. Despite strong ad growth in the third quarter, the expected slowdown exacerbates concerns that robust revenue growth alone is insufficient to offset the aggressive expenditures. Oppenheimer analysts believe investors will struggle to properly value Meta until there is clear visibility into the near future, as aggressive revenue growth is being “offset” by such high spending. This situation places Meta at a disadvantage compared to competitors like Google, which trades at a reasonable P/E multiple and presents predictable earnings.

Summary: The Danger of a Negative Narrative

The shared concerns from Wells Fargo and Oppenheimer signal a significant shift in the narrative surrounding Meta. Beyond the cuts in estimates, the new negative narrative views the AI investments as a “frontier project” without a solid, short-term business plan. This risk—of wasting CapEx on projects detached from immediate monetary reality—pushes Meta toward a point of significant uncertainty, justifying the rating downgrade. Investors will need to closely monitor Meta