ewsba.se
Meta Platforms (META) beat EPS by 56.79%, but $3.13 per share came from an IRS tax gift—strip it out and the story unravels completely.
Super Micro Computer (SMCI) trades at 0.60 price-to-sales versus Meta’s 7.21, while capturing the actual cash from Meta’s $125-145B capex buildout.
The analyst who called NVIDIA in 2010 just named his top 10 stocks and Super Micro Computer wasn't one of them. Get them here FREE.
Meta Platforms (NASDAQ:META) is dominating headlines and TV again after a 56.79% EPS beat and another round of personal-superintelligence rhetoric from Mark Zuckerberg. But here's what you should actually be watching.
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%. Strip the gift out, and normalized EPS lands closer to $7.31. Meta's celebration was borrowed from the IRS, with the next few quarters guided back to a 13-16% tax range.
The operating picture is worse. 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. Reality Labs lost another $4.03 billion in the quarter, layered onto $19.2 billion in 2025 losses. The stock has fallen 9.59% in the week since the report. The crowd is finally noticing what the cash flow statement already said.
Super Micro Computer (NASDAQ:SMCI) 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, and the AI buildout is more than capable of pulling even the bruised players up with it. Right now SMCI is the cheapest hyperscaler infrastructure name on the board, almost entirely because the prior accounting drama scared off the tourists.
Start with the valuation gap. SMCI trades at a forward P/E of 10 and a trailing P/E of 20, against Meta's trailing 22. SMCI's price-to-sales ratio sits at 0.60 versus Meta's 7.21. You are paying a tenth of the multiple for the company on the receiving end of $125-145 billion in Meta capex alone, never mind Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), and Oracle (NYSE:ORCL).
Q2 FY2026 revenue hit $12.68 billion, a 123.4% jump from $5.68 billion a year earlier. Non-GAAP EPS came in at $0.69 against a $0.49 consensus. Management raised full-year FY2026 revenue guidance to at least $40 billion, up from $36 billion, with more than $13 billion in NVIDIA Blackwell Ultra orders already booked. CEO Charles Liang put it plainly. "We are scaling rapidly to support large AI and enterprise deployments while continuing to strengthen our operational and financial execution."
Finally, the balance sheet has caught up to the story. Cash and equivalents reached $4.09 billion, a 186% year-over-year increase, leaving SMCI in a net cash position. Market cap is roughly $16.7 billion, against Meta's $1.55 trillion. One of these has room to re-rate higher without bumping its head on the law of large numbers.
The trade-off worth naming honestly is margin. GAAP gross margin compressed to 6.3% from 11.8% a year ago, the cost of muscling into very large AI deployments. Volume is doing the heavy work in the meantime, and the shares are still down 13.49% over twelve months while the business doubled. That looks like a coiled spring.
Retirement-focused investors want exposure to the company cashing the AI capex checks, where the dollars actually land on the income statement. The supplier side of this trade looks more interesting than the headline.
This analyst's 2025 picks are up 106% on average. He just named his top 10 stocks to buy in 2026. Get them here FREE.