$META · Everything Money · 2026-10-31

Then we will put the “buy the dip” strategy to a real test with three big names whose shares have declined. Google, Meta, and Dell.

So, let's put that into practice now. Let's take these three companies that have declined as spending on artificial intelligence has piled up – Google, Meta, and Dell – and discover their true value.

Now, let's move on to Meta, arrow number two. Okay guys, here are the reasons to be optimistic about Meta's stock. The primary advertising engine is growing strongly. In its report issued on October 21, Meta announced a 26% year-on-year increase in revenue .

Ad impressions, i.e., the number of ads shown to users, increased by 10%, and the average ad price increased by 14%. This is unbelievable.

Secondly, artificial intelligence can improve advertising and create new commercial products. Meta has launched its AI agent " Muse" for small businesses with integrations including Shopify, QuickBooks, Stripe, and Canva.

These offers may help Meta sell outside of traditional advertising.

Third, the third reason for optimism is that the company is adding more AI-guided methods to maintain the usefulness of its platform. Facebook has introduced tools that allow users to specify their interests and modify recommendations in the "Feed" and "Reels".

Guys , these companies make money when people stay on their platforms. Therefore, their goal is to ensure that we are provided with the type of content we want to see .

Now, let's move on to the reasons for pessimism. The expansion of artificial intelligence is putting pressure on costs and raising the bar for required returns. Meta's costs and expenses rose by 68% year-on-year in the third quarter . Guys, operating income fell by 37%.

Secondly, Meta is seeking to raise a huge amount of capital to fund its artificial intelligence infrastructure. So, guys, they're offering shares worth a total of $100 billion.

In doing so, you may cause shareholders' stakes to be inflated. This is not a good thing.

Third, the commercial terms for using content in artificial intelligence have attracted a lot of scrutiny. Reuters reported that digital publishers and advertisers complained to EU and UK authorities about terms they said could grant Meta broad rights to use their content.

Therefore, there may be some upcoming legal battles regarding this matter.

As we enter a new phase of technology, concerns always arise regarding what happens in the markets and what happens with countries and regulatory agencies. This will continue. Now, let's take a look at Meta's figures.

Meta is valued at 1.6 trillion, and the enterprise is valued at 1.73, with debts of $120 billion . Currently, Meta's cash flow has decreased significantly. The company generated $30 billion in free cash flow last year, even though its net income was $75 billion.

It generated $38 billion in free cash flow over the past five years, although its net income for the five years was $50 billion. I am still not worried about their debt, despite the reduced cash flow, because the money is being invested in artificial intelligence.

Next, high returns on capital, just like Google. Their profit margin is slightly more stable. Essentially 30 to 31% overall, although the gross profit is much higher at 81% compared to 60% for Google, as you may recall.

So, I'm somewhat surprised by that , but I hope it settles down a bit. I hope it will start to rise a little over time.

Now, the difference, guys, is that Meta is only selling for 21 times the profits. If you recall, in November 2022, it was trading at $88 per share, which makes today's price-to-earnings ratio approximately three or four?

If it were still selling for $88, that would show how crazy the markets are.

Okay, now here are our eight pillars . Guess what? Exactly the same as Google. Better figures in the five-year price-to-earnings ratio and five-year free cash flow rate, but cash flow has also declined over the past five years.

Let's take a look at the analysts' estimates. Analysts expect earnings per share to grow from 31 to 52 in the next four years, with growth rates of 38%, 7%, 15.5%, 24%, and 9%.

It's a little confusing, but it probably falls within that range. Revenue growth was 27%, 20%, 18%, 18%, and 8%. Revenue growth from $254 billion to $460 billion .

Okay guys, here's a stock analysis tool . Revenue growth figures. I put in 7%, 11 %, and 15%. That may be conservative because year-on-year revenue growth was around 26%. I bet I'm being very reserved here.

I will raise the numbers slightly to 7%, 12%, and 17%.

Next, profit margin and free cash flow. I put 28%, 30%, and 32%, just because they haven't proven their ability to increase profit margins as revenues grow, but again, I might be being conservative here.

Next, the earnings multiple (EPS). 18, 22, and 26. And again, my return is 9.5 percent with no safety margin.

So, you pressed the analyze button, and the stock is currently at 625. Look at this. I have a low price of 586, a high price of 1900, and an average price of 1060. It's truly unbelievable.