"The headline EPS is an optical illusion. $8.03 billion of Q1 profit came from a U.S. Treasury notice on capitalized R&D costs, adding $3.13 per share and pushing the effective tax rate to negative 23%."
"Meta raised 2026 capex guidance to $125-145 billion, against $72.2 billion spent in 2025. Free cash flow grew just 11.74% on revenue growth of 33.1%. That gap is the AI infrastructure tax, and it widens from here."
"Super Micro Computer is the company selling the racks Meta is busy buying. The stock has rallied roughly 19.85% over the past month on the back of a Q2 FY2026 earnings report that more than doubled revenue year over year."
"SMCI trades at a forward P/E of 10 and a trailing P/E of 20, against Meta's trailing 22. You are paying a tenth of the multiple for the company on the receiving end of $125-145 billion in Meta capex alone."
Meta Platforms reported a 56.79% EPS beat, but $8.03 billion of profit stemmed from capitalized R&D costs, distorting the actual earnings. Normalized EPS is closer to $7.31. The company raised its 2026 capex guidance significantly, while free cash flow growth lagged behind revenue growth. Reality Labs continues to incur substantial losses. In contrast, Super Micro Computer has seen a stock rally due to its role in Meta's infrastructure spending, trading at lower valuation multiples compared to Meta, making it an attractive investment opportunity.
Read at 24/7 Wall St.
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