Cathie Wood Is Selling Meta Platforms Stock. Should You?

The “Magnificent Seven” trade is still very much alive. The elite group of mega-cap tech names — Nvidia (NVDA), Alphabet (GOOGL), Microsoft (MSFT), Meta Platforms (META), Tesla (TSLA), Apple (AAPL), and Amazon (AMZN) — has seen share prices skyrocket on the back of AI, even if not every name managed to beat the S&P 500 ($SPX) last year. What’s happening now is simple — leadership inside Big Tech keeps shifting, and the market is focused on who captures the next leg of AI-driven growth. That is pushing investors to be more selective about which of these giants they still want to own in 2026.

One high-profile example of that selectivity is Cathie Wood. The legendary investor has been trimming her Meta Platforms stake across multiple exchange-traded funds (ETFs), moving money toward other “disruptive innovation” names and themes instead of adding more to META after its AI-led re-rating. That stands out because Meta remains part of the same AI-driven ecosystem that has supported much of the Magnificent Seven’s strength, and it is still a core holding for many growth investors.​

So, if AI continues to propel mega-cap tech, and Meta is still a central player in that story, what does it mean when one of the market’s most famous innovation investors is selling? Should investors be thinking about doing the same? Let’s find out.

Meta Platforms (META) runs a huge mix of social media platforms and messaging apps, and it mainly makes money by selling digital ads. More of that ad business is now being supported by AI targeting and new content formats.

Even with Cathie Wood trimming her stake, over the past 52 weeks, META stock is up about 1%. However, shares are down 6% year-to-date (YTD) as of this writing.

Meta Platforms trades at about 20.6 times forward earnings, compared with roughly 16 times forward earnings for its sector. That suggests investors are paying extra for its growth and cash-generation profile.

Meta has also become more focused on returning cash to shareholders. META stock has an annual dividend yield of about 0.33%, and the company pays a quarterly dividend of $0.53 per share. It also has a modest forward payout ratio of just 7.02%, with only one year of consecutive dividend growth so far.

In the third quarter of 2025, family daily active people reached 3.54 billion, up 8% year-over-year (YOY). Ad impressions rose 14% YOY and the average price per ad increased 10% YOY. That helped push revenue to $51.24 billion, up 26% YOY (or 25% YOY on a constant currency basis). Costs and expenses increased faster as well, though, up 32% YOY to $30.71 billion, as Meta kept spending heavily on AI and data centers. Capital expenditures came to $19.37 billion for the quarter.

Even with that level of spending, Meta posted $30 billion in operating cash flow and $10.62 billion in free cash flow. The company ended the period with $44.45 billion in cash, cash equivalents, and marketable securities, and returned $3.16 billion through buybacks plus $1.33 billion through dividends and equivalents.

Meta’s growth story is increasingly tied to how hard it is rebuilding its infrastructure for AI and data-heavy work. The company’s recent agreement with TerraPower to develop up to eight total Natrium units in the U.S. is a clear example. Meta is basically lining up as much as 2.8 gigawatts of carbon-free, always-on power, with the option to push that further using built-in storage, starting as early as 2032. In plain terms, Meta is trying to secure its own long-term, low-carbon power source so it can keep expanding AI and data centers without getting stuck waiting on the grid.

On the demand side, Meta is keeping its AI features stocked with content. The multi-year AI content partnership with People brings in lifestyle brands like PEOPLE, Better Homes and Gardens, Allrecipes, Food and Wine, Southern Living, and more, giving Meta AI a steady flow of fresh material across entertainment, home, food, health, and finance. That creates more reasons for users to use Meta AI, drives more time spent across its apps, and opens more chances to show ads and keep people inside the ecosystem, all while still giving proper attribution and sending traffic back to partner sites.

The Blue Owl Capital joint venture around the Hyperion data center campus shows how Meta is combining its operating know-how with outside funding to move faster. Meta will handle construction and property management for a facility built specifically around its long-term AI plans, while Blue Owl brings “capital at scale” and digital infrastructure experience. The setup helps Meta Platforms grow and copy its data center footprint without taking on every dollar of development risk on its own balance sheet.

Meta’s near-term setup is pretty straightforward. Management expects Q4 revenue in the $56 billion to $59 billion range, and the next earnings release is expected in early February. The average EPS estimate for the current quarter sits at 8.29 versus 8.02 a year ago, which points to estimated 3% YOY growth. Looking at the full year, analysts see fiscal 2025 EPS at 29.40 versus 23.86 in the prior year, a 23% YOY increase.

That view is also reflected in what major firms are saying. Morgan Stanley reiterated an “Overweight” rating in December with a price target around $853, saying that Meta’s stronger ad tools can lift income even while spending stays high. Meanwhile, Goldman Sachs analyst Eric Sheridan kept a “Buy” rating and raised his target to $870, pointing to the staying power of Meta’s ad business.

The broader consensus is still very bullish. Analysts rate META stock as a consensus “Strong Buy” with an average price target of $838.25. That suggests about 35% potential upside from current levels.

If you’re selling META stock here just because Cathie Wood is trimming, you’re probably solving the wrong problem. Her moves reflect portfolio construction and style, not some hidden, fatal crack in Meta’s story. The fundamentals, cash generation, and AI buildout still look like a solid setup for patient investors, even if META stock won’t move in a straight line. So, unless your own thesis has broken or your risk tolerance has changed, this appears moreso to be a name to hold or selectively add to on weakness, with the odds favoring higher prices over the next few years.

On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com