Erste Group downgraded Meta Platforms Inc. (NASDAQ: META) from Buy to Hold, citing expectations for a sharp increase in spending tied to the company’s artificial intelligence expansion and reduced potential for share price appreciation at current valuation levels.
The brokerage said Meta expected a significant acceleration in capital expenditures in 2026 compared to 2025, primarily to support infrastructure development and AI-related initiatives, including computing and cloud capacity investments.
Erste noted that the company’s asset turnover ratio — a measure of revenue relative to total assets — was expected to decline further as a result of heavier capital investments. Meanwhile, Meta’s share buyback activity had already dropped substantially and was likely to remain constrained given the scale of planned spending.
The firm said it saw “limited upside potential” for Meta in the near term, despite the company’s strong market position, due to the anticipated rise in capital intensity and reduced buyback flexibility.
