Among the top Magnificent 7 stocks in the market, Meta Platforms (NASDAQ:META) is clearly a perennial favorite for those thinking long-term. 

Indeed, investors who have bought and held Meta stock for any extended period of time are happy they’ve done so. The social media giant has billions of eyeballs across its various online platforms. What’s perhaps most impressive about Meta’s business model is the fact the company has done such a great job of monetizing these eyeballs over the years, benefiting from some very strong demographic growth trends as well. 

And with one of the most favorable valuation multiples of its Magnificent 7 peers, and a growth model that’s clearly far from broken, one might expect most investors to remain on the bullish end of the spectrum. To be frank, that’s where I’m at.

That said, I always like to look at the other side of the coin, so let’s do just that. Here’s why Meta Platforms shareholders may not be happy with the stock this next year.

Valuation Has Priced In Plenty

Stock chart heading lower with a flaming red arrow pointing downwards

The so-called “Santa Claus” rally many investors bank on this time of year centers around a specific period of time (pretty much right now through mid-January), when stocks historically tend to rally. It’s not just “most of the time” this happens – roughly 80% of instances throughout modern history, investors have had a profitable three week period here. Thus, with strong seasonality at investors’ backs, it’s hard to see how Meta could be a laggard.

That said, I’m of the view that much of Meta’s recent growth may already be priced in. That goes for many of the top tech giants in the market that have been investing heavily in AI.

Why do I say that’s possible? Well, questions are really starting to circle around companies like Meta that are really ramping up spending on their AI initiatives. In fact, these concerns have boiled over into full out tantrums of late, in which we’re seeing valuations swing wildly (double-digits in some cases) over shorter and shorter time frames. So, the question is whether this historically strong seasonal tailwind can take Meta higher, or if current market sentiment around AI and companies which are leading the way in this space will ultimately hurt companies like Meta more. 

At 29-times trailing earnings (and forward earnings which imply significant growth – currently at 22-times), that’s a lot of growth investors have put into their DCF models. I’m also skeptical of the profitability of this future growth, with AI potentially running the risk of a race to the bottom, in which companies simply don’t produce the kinds of profits many had expected early on (I’d say in a similar way to how the cannabis bubble played out a few years ago). 

We’ll see. 

Margin Pressures Could Be the Key to Watch

A financial statement with a calculator and a stethoscope

Meta isn’t set to report its fourth quarter earnings until January 28, so there won’t realistically be any upcoming earnings for investors to hone in on as a key catalyst for big moves over the so-called Santa Claus period. That said, investors will certainly be updating their expectations of how Meta will have already performed well ahead of this print. And if market expectations for earnings and cash flow growth slows as a result of the negative impact all this AI-related CapEx spending will have on the company’s balance sheet, that’s ultimately not a good thing for this stock.

That said, what I think could be more important than historical spending levels is how investors perceive Meta will ramp up its spending (or not) on its continued AI applications and tools. For now, the market continues to want to cheer additional announcements around further AI-generated utility out of Meta. But as was the case with the company’s initial spending on its metaverse ambitions (via its Reality Labs division), an eventual tamping down of this spending ultimately led to the reversal rally we saw coming out of 2022’s lows. 

I also think the macro backdrop in 2026 could simply be less supportive than what we’ve seen play out thus far in 2025. If unemployment really spikes, or we do get some serious geopolitical headwinds on the horizon, all companies could see a re-rating lower, no matter their industry. I think that’s something investors need to take into consideration, whether you’re of the view that incoming tax refund checks will provide the stimulus that may offset these headwinds. The question is how strong they’ll be, and the jury still appears to remain out on that front.