"The huge checks Meta Platforms Inc. is writing to support its artificial intelligence ambitions are reminding some investors of the massive metaverse outlays that crippled the stock just a few years ago. Facebook's parent posted results last week that beat expectations on key metrics. But Wall Street's focus was on capital expenditures, which the company said would be as much as $72 billion this year and notably larger in 2026."
"Then, on the earnings call, Chief Executive Officer Mark Zuckerberg downplayed concerns that Meta might be over-spending on things like its Superintelligence Labs group, saying it's the right strategy to aggressively front-load building capacity. Now Meta shares are on their worst four-day run since November 2022, falling almost 17% and wiping out $307 billion in market value."
"Not coincidentally, the 2022 selloff was also triggered by investors questioning its spending plans, ultimately sending the stock down 77% from a 2021 peak. This feels like a return to Meta's old days of overspending on things that are frivolous or which don't have appropriate return demands tied to them, said Tiffany Wade, senior portfolio manager at Columbia Threadneedle Investments, which has about $714 billion in assets. Investors are losing patience."
Meta plans capital expenditures of as much as $72 billion this year, with even larger outlays expected in 2026. Quarterly results beat expectations on key metrics, but investor attention centered on heavy AI-related spending and capacity building. CEO Mark Zuckerberg defended aggressive front-loading for initiatives such as Superintelligence Labs. Shares dropped almost 17% over four days, erasing roughly $307 billion in market value and recalling a 2022 selloff tied to spending concerns. Investors are increasingly skittish about rising AI outlays without clearer signs of returns, despite the stock remaining up year-to-date.
Read at www.mercurynews.com
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