Key Points
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The “Magnificent Seven” have played a foundational role in lifting the broader market to new heights.
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Share buybacks have been a core catalyst for Meta over the last decade — but the company hasn’t spent a dime on repurchases since the third quarter of 2025.
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Meta’s AI ambitions offer long-term promise and potential short-term peril.
- 10 stocks we like better than Meta Platforms ›
Since the 2022 bear market bottomed nearly four years ago, Wall Street’s historic rally has been driven by two catalysts: the evolution of artificial intelligence (AI) and the leadership of the “Magnificent Seven.”
The beauty of the Magnificent Seven is that they all possess one or more sustainable competitive advantages, providing them with ample cash flow to undertake intriguing growth initiatives. This includes social media maven Meta Platforms (NASDAQ: META), which is among the 13 publicly traded companies on U.S. exchanges to be valued at north of $1 trillion.
But sometimes high-growth initiatives require sacrifices. Mark Zuckerberg’s Meta appears set to abandon a $174 billion investment that’s had a decisively positive impact on its bottom line to further its AI ambitions.
Meta Platforms may be on the verge of axing this $174 billion investment
Make no mistake: Meta’s billionaire boss has aggressively invested in several high-growth initiatives, including the metaverse and, more recently, artificial intelligence. But it’s Meta’s hearty share repurchase program that’s done some heavy lifting over the last decade.
Although no share buybacks were undertaken in 2016, the company has been purchasing its own stock on a regular basis ever since:
- 2017: $1.976 billion in full-year share buybacks
- 2018: $12.879 billion
- 2019: $4.202 billion
- 2020: $6.272 billion
- 2021: $44.537 billion
- 2022: $27.956 billion
- 2023: $19.774 billion
- 2024: $30.125 billion
- 2025: $26.248 billion
Collectively, Meta Platforms has spent approximately $174 billion to retire nearly 12.7% of its outstanding shares. For companies with steady or growing net income, such as Meta, a steadily declining share count can result in higher earnings per share over time. In other words, share repurchases have made Meta’s stock more attractive to value-seeking investors.
But with the company increasing its forecast for AI-related capital expenditures (capex), it hasn’t repurchased shares since the third quarter of 2025. Furthermore, reports have suggested that Meta is weighing the option of issuing equity and undoing some of its share buybacks to fund its AI infrastructure build-out.
History offers a tale of promise and peril for Meta
Historically speaking, Meta’s all-in approach with artificial intelligence isn’t without risks. Every game-changing technology for more than three decades has endured an early stage bubble-bursting event. Meta shareholders are especially aware of this historical correlation, given the company’s poor performance in 2022 after the metaverse bubble burst.
The puzzle pieces for an AI bubble are firmly in place. If history were to rhyme and the AI bubble bursts, Meta Platforms’ stock would likely be weighed down, at least over the short term.
Big Tech CapEx has reached unprecedented levels:
The combined CapEx of Amazon, $AMZN, Google, $GOOG, Meta, $META, and Microsoft, $MSFT, is expected to surge +98% YoY, to a record $715 billion in 2026.
This is nearly 3 TIMES the amount spent in 2024 and more than 5 TIMES 2023… pic.twitter.com/L29Dx8JaAi
— The Kobeissi Letter (@KobeissiLetter) May 2, 2026
At the same time, Meta is one of the few companies enjoying immediate benefits from the integration of AI solutions. Incorporating generative AI into its advertising platforms has enabled Meta’s clients to tailor static and video messages to users. This can improve click-through rates and enhance Meta’s already impressive ad pricing power.
Zuckerberg’s company also recently unveiled plans to sell excess AI data center compute capacity. This should help ease the sting of Meta’s otherworldly AI capex, especially given its sustainable competitive edge and robust cash flow tied to its social media assets.
Meta’s AI investments should pay off in the long term, but the ride could be bumpy without share buybacks as an added catalyst.
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Sean Williams has positions in Meta Platforms. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool has a disclosure policy.
