$META · The Motley Fool · 2026-11-06

And now we're back to what I consider a very low valuation, and that's Meta stock. Well, I think Meta's stock price is still a little higher than it was about two months ago, at around $500 or $550, but it's trading at about 20 times its projected earnings, sometimes a little less.

So , we're back to those levels now, and Meta has performed amazingly this quarter. I believe that advertising business will surpass Google's revenue by the next quarter, which is amazing.

But Meta is a highly profitable company at the core of its business, especially its advertising business. The company is experiencing an increase in ad impressions and continues to attract more users to its suite of apps, which currently exceeds 3 billion users.

Therefore, it is an excellent company and is growing rapidly. It is clear that artificial intelligence greatly improves its core business , making it more profitable. It is also now showing great success in news dissemination, and the news achieved great success in its early days.

Of course, this service is not available globally. Available in the United States, and I believe in Canada as well. It was recently launched in Japan, and may be launched elsewhere soon.

But the reactions to the news were very positive.

Does it cost them a lot of money to run it? Yes, and this is probably one of the main reasons for the current low free cash flow, which is expected to remain negative over the next two quarters, namely the construction of data centers, the purchase of graphics processing units, and the like.

However , I still think the market misunderstands Meta's business because, unlike Microsoft, Amazon, or Google Alphabet, it doesn't have a cloud business that allows it to say, "Look, we're spending a certain amount and generating revenue through our cloud business."

But they can say: "Look, we are investing heavily in our core business. Our core business is constantly improving in targeting, it's constantly improving. Our recommendation systems are also improving, and now we are investing in new products like news , from which we will gradually generate profits."

But they also mentioned that making money from the news will start much earlier than usual in Meta, because they will see the opportunity as ripe, but they also realize the need to start making money one way or another.

So, Meta's stock rose 7% after trading hours when they announced their earnings, then fell again.

I consider this a gift from the market, because I truly believe this is a very profitable project, and the free cash flow will turn positive, perhaps within a year from now, after the major investments are completed.

Not all of it will be completed, but the major investments have been made, and you will now begin to see the core business develop and generate significant cash flow in the foreseeable future.

So, I need to know. I've repeated myself a lot when talking about Meta over the past couple of weeks, but it's one of those companies that, just like Google next year (and maybe we'll talk about Google in this video, who knows), is a very good company that's trading at very attractive prices for me.

Yes, I think Meta, like many large technology companies, is still in the build and spend phase. What's interesting about the news, even up to the launch of Muse, and it's still unclear whether that will give the company a long-term boost, is that most of the AI expertise Meta gained was internal, you know .

They were unable to invest it effectively in a marketable product.

This has been a growth boost for the core advertising business, which is great, but as we have seen, there has been revenue growth, but costs are also rising sharply. As you know, revenues for the last quarter rose by approximately 30% year-over-year, but costs increased by approximately 70%.

So , as you can see, operating income has decreased.

Clearly, there is pressure on cash flows. As you know, Meta optimists will say that this is crucial to their ability to grow in the long term. I think this may indeed be true, but this discrepancy is what worries some investors, who are wondering: Is this a short-term trend, or will this growth and these costs slow down over time?

As we mentioned today, we have seen mixed reports from companies considered among the strongest financial companies in the world, such as Meta and Alphabet.