Is Meta Platforms Stock a Buy Below $650?

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Quick Read

• Meta (META) revenue grew 26.2% year-over-year to $51.24B in Q3 2025 and beat analyst estimates by 3.71%.

• Meta’s cash per share declined 76.74% year-over-year as the company plans to spend up to $72B on AI in 2025.

• The stock fell from a peak near $785 to below $600 before recovering to around $650.

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Meta Platforms (NASDAQ:META) has been on a terrific run since it bottomed out in late 2022. The stock soared well beyond some of the most bullish predictions made just three years ago, thanks to Zuckerberg's bet on AI paying off well. Very rarely do you see a turnaround this impressive.

Having said that, no stock in the market rallies forever. The same is the case with META stock, and Wall Street seems to be taking its rose-tinted glasses off.

The stock fell from a peak close near $785 to a trough below $600. It has since recovered to nearly $650 but has been flat in the past six months. As one of the handful of companies spearheading the AI buildout, a sideways trend in the stock market for this long can be a clue that the market wants to see results before slapping a higher premium on the stock.

The question is, has the stock declined far enough for you to consider buying the dip? Let's take a look.

Zuckerberg's all-in gamble on AI has paid off

Meta was desperately in need of a new direction three years back. The company's Family of Apps segment (which comprises Facebook, Instagram, WhatsApp, and Messenger) started to slow down sharply. These apps were cash cows, but the market demanded growth. META stock tumbled below $90 as user growth started turning negative.

Zuckerberg turned to Reality Labs to fuel growth, but Wall Street wasn't buying it. Analysts saw it as a money pit where the Family of Apps' cash was being squandered.

Then came ChatGPT in late 2022, after which Meta's fortunes started turning around. This time, this avenue for growth turned out to be very rewarding as Wall Street slapped a bigger premium for every dollar Meta spent on AI.

The company plans to spend up to $72 billion on AI for all of 2025. One could say Meta is "spending good money after bad," but if you look at the top line, this has not been the case.

Q3 2025 revenue grew 26.2% year-over-year to $51.24 billion. It beat analyst estimates by 3.71%. Growth has been the missing puzzle for Meta all along, so should you put down the tin foil hat and buy back in earnest?

Not so fast.

The gamble is way more aggressive than you think

Meta AI is a far bigger endeavor than Reality Labs, and that's what gives it so much appeal. At the same time, the cost is much higher. Meta is spending more than just the cash flow from the Family of Apps segment on AI.

In Q1 2025, Meta Platforms had $20.711 billion in net cash on its balance sheet. The Q3 2025 report showed $6.612 billion in net debt. In other words, cash per share declined 76.74% year-over-year in Q3 2025.

The AI gamble needs to pay off, and pay off very quickly. Otherwise, Meta will have to go deeper into debt for an investment that may or may not pay off.

The counterargument is that AI has already paid off, considering ads have been greatly boosted through AI targeting. However, that's nowhere near enough to recoup what has been spent. The advertising market is cyclical. Thus, you need to wait longer to see the full picture.

Buy the dip on META stock or bail?

If I held META stock, I would not add more to it. It's not because the business is bad, but because you may be paying more than it's worth.

In late 2022, I noted, "Once ad revenue snaps back and growth returns, investors will pay a much higher premium for Meta stock."

You pay well over double the premium on the stock today, but I would argue it is on shakier ground. Meta is a more concentrated bet on AI, without many of the advantages.

If you want to bet on the AI + advertising synergy, I'd buy Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) instead. If you want to bet on the broader AI trend, Microsoft (NASDAQ:MSFT) is another good buy.

We may be late in the AI cycle. Hence, I'd buy into stocks that will keep me in the green in the long run, rain or shine. Meta is not diversified enough to do that.

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