Arete’s senior tech analyst Rocco Strauss says Meta Platforms Inc (NASDAQ: META) could “run out of cash and tap into the net debt territory” within the next two years.
His remarks arrive only hours before the tech behemoth is scheduled to report its fiscal Q3 results. Consensus is for META to earn $6.67 a share in its third quarter on $49.5 billion in revenue.
Ahead of the financial release, Meta stock is up more than 50% versus its year-to-date low in April.
Why might Meta stock enter net debt territory by 2027
While Meta is expected to record robust year-on-year increase in its profit and revenue for current quarter, Strauss sees its inflating operating and capital expenditures as the primary reason behind its deteriorating cash stature.
“Assuming already a trim down kind of like buyback pattern, Meta Platforms actually runs out of cash, tapping into net debt territory by 2027,” he told CNBC in a recent interview.
META is expected to spend $70 billion in CAPEX this year – and another $100 billion in 2026.
Much of this is being channeled into artificial intelligence (AI) infrastructure, compute, and data centers. Yet, Strauss argues the company’s monetisation path remains unclear.
On “Worldwide Exchange”, he also flagged the lack of a go-to-market strategy for Meta Platforms’ Llama model and questioned the real usage of the firm’s AI assistant – despite its touted exposure to $1 billion users as well.
Over time, aggressive spending and subdued monetisation of the AI assistant could begin hurting Meta stock, the Arete analyst concluded.
What running out of cash would mean for META shares
If Meta does indeed enter net debt territory as Strauss warns, it could significantly alter the overall investor sentiment and valuation multiples on the AI stock.
The company’s robust buyback plan has historically supported its share price, but the Arete analyst argues “current spending levels” paired with a “trimmed down buyback pattern” could erode that support.
Running out of cash would raise concerns about META’s ability to fund future innovation without diluting shareholders or taking on expensive financing as well.
Meanwhile, competitors like Google are integrating its next-gen multi-model AI assistant, Gemini, across platforms, including potentially backing Apple’s Siri – creating a stark contrast in strategic execution.
This competitive pressure could further weigh on META shares in 2026, as per the Arete analyst.
How to play Meta Platforms heading into 2026
Meta’s Q3 earnings call will be closely watched for signs of AI monetisation progress and financial discipline. Investors will scrutinize whether the firm’s investments are translating into sustainable returns.
A strong report could reaffirm confidence in Mark Zuckerberg’s long-term vision – but a miss may amplify concerns about cash burn and strategic clarity.
With META stock seemingly priced for perfection and options data implying a 6.2% post-earnings move, the Nasdaq-listed firm’s financial trajectory is at a critical inflection point.
Wall Street currently has a consensus “buy” rating on Meta shares with the mean target of roughly $869 indicating potential “upside” of another 15% from here.
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