Meta Platforms Inc's (NASDAQ:META) sell-off is starting to look less like a verdict on its future and more like a classic case of investors overreacting to a spending binge. The stock is now trading at its lowest forward earnings multiple since the 2022 market bottom.
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Wall Street expects the company to compound earnings at more than 15% annually for the next three years. For bullish investors, that disconnect is the entire story: Meta's AI capex may have broken the stock in the short term (down 17% over the past month alone), but the longer-term math is beginning to look too compelling to ignore.
A Forward PE Reset No One Expected
Meta's forward P/E has slid to 19.7x, well below its post-pandemic average of 23x, putting the company back into a valuation zone last seen during historic market stress. The irony is that the fundamentals don't resemble 2022 at all — revenue growth is stabilizing, Reels monetization is improving and Meta's cost discipline is already filtering through earnings.
The market, still hungover from last quarter's AI-spend shock, is pricing Meta as its growth engine stalled. But analysts tracking Meta's multi-year earnings trajectory say that's simply not the case.
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The Spending Story Is Messy — But Stabilizing
Yes, Meta's AI buildout has been expensive, jarring and harder for investors to model than anything the company has done in a decade. But the spending curve is flattening and the payoff is looking clearer.
Llama's adoption is accelerating, Meta's GPU footprint is finally scaling to match its ambitions and new ad tools built on AI are showing early signs of improving advertiser ROI — the metric that matters most for long-term revenue power.
Why Bulls Think The Street Overcorrected
To bullish investors, the setup resembles a classic rerating gap: double-digit earnings growth paired with a valuation that assumes a slowdown.
Meta may have spent too aggressively, and Wall Street may have punished the stock too deeply — but those two forces don't stay in sync forever.
If earnings land anywhere near the 15% growth Wall Street models, this reset won't last. For now, the bulls see something simple: a mega-cap growth engine temporarily priced like it's out of fuel.
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