From Cost Center to Cloud: Meta’s Infrastructure Avalanche Meets a Skeptical Analyst

Meta Platforms is writing the biggest check in its history for data centers, and now Wall Street is split on whether those billions will ever generate a return beyond advertising. The company plans to spend $125 billion to $145 billion on capital expenditure in 2026 alone, anchored by the Hyperion project in Louisiana that has ballooned from an original $27 billion estimate to more than $50 billion. For years, that outlay was viewed purely as a cost of doing business. Now management is floating a potential cloud-computing unit that could sell excess server capacity to corporate clients, challenging the dominance of Amazon, Microsoft and Google.

The new narrative got a cold reception from Wedbush, which initiated coverage of Meta on July 16 with a Neutral rating and a $671 price target. In a terse assessment, the firm argued that unlike Alphabet or Amazon, Meta lacks a clear story for how its AI investments will pay off outside the core ad business. That stance puts Wedbush at odds with the broader analyst community: MarketBeat pegs the consensus at “Moderate Buy” with an average target of $830.45, while Barchart reports a “Strong Buy” consensus and a mean target of $823.50. The gap highlights deep disagreement over whether Meta’s infrastructure binge will ever yield a meaningful second revenue stream.

The Hardware Behind the Hype

The physical scale of the buildout is hard to overstate. Meta is more than doubling its global compute capacity from 7 gigawatts this year to 14 gigawatts in 2025. The Louisiana facility, codenamed Hyperion, will alone reach 5 gigawatts. CEO Mark Zuckerberg acknowledged as early as May that cloud computing is “definitely an option,” citing regular inquiries from companies wanting to buy API services or spare compute power. To further reduce reliance on external suppliers, Meta will begin production of its own AI chip, “Iris,” in September. Designed with Broadcom and manufactured by Taiwan Semiconductor, it is part of the MTIA (Meta Training and Inference Accelerator) project aimed at loosening Nvidia’s grip on the company’s hardware stack.

Stock Drifts as Legal Headwinds Mount

At the German close on Thursday, Meta shares traded at €579.10, down 2.4% on the week — a mild decline that coincided with the Wedbush call. The stock sits 14.56% below its 52-week high of €677.80 reached on July 31, 2025. The relative strength index of 60 suggests moderate upward pressure rather than overbought conditions, indicating the market is in a wait-and-see posture.

Should investors sell immediately? Or is it worth buying Meta?

That patience is being tested by a cascade of regulatory and legal challenges. In early July, the European Commission preliminarily found that Facebook and Instagram violate the Digital Services Act with “addictive design” features such as infinite scroll, autoplay and personalized recommendation algorithms. If the finding becomes final, Meta could face a fine of up to 6% of global annual revenue. Meanwhile, U.S. trials are scheduled for July 27 in Los Angeles and August 18 in a four-state lawsuit, with potential penalties of up to $1.4 trillion based on internal Meta documents concerning the platforms’ addictive effects. A separate lawsuit tied to AI-related layoffs adds another layer of risk.

New Revenue Streams Enter the Picture

Amid the clouds, Meta is trying to draw a line from its infrastructure spending to new monetization. On August 1, the company will start charging for its Meta Business Agent, an AI assistant for businesses operating on WhatsApp, Instagram and Messenger. The pricing is set at $2 per million tokens, which the company says works out to roughly four to five cents per message; the free trial ends in late July. BNP Paribas projects that subscription models centered on Meta One could generate $13.5 billion in revenue by 2028.

Whether those numbers are enough to justify the capex splurge — or to shift the narrative that Wedbush found lacking — will be put to the test on July 29, when Meta reports second-quarter earnings after the close. The company has guided for revenue between $58 billion and $61 billion, following a 33% surge to $56.3 billion in the first quarter. Investors will be listening closely for any concrete details about a potential cloud offering and how management plans to protect margins as the data-center tab keeps growing.