Meta: AI Spending Leaves Little Margin Of Safety (Rating Downgrade)

Meta Platforms, Inc. is downgraded to Hold due to high valuation, negative free cash flow, and AI-driven spending outpacing cash generation. Q3 revenue rose 26% to $64.6B, but profit margin dropped to 35.4%, and EPS growth was only 2.1% year-over-year, excluding legal charges. AI investments are critical, but spending discipline is lacking; free cash flow turned negative in Q3 and is likely to remain pressured through 2026.