"With its year-to-date gain whittled down to 4%, Meta is the new Magnificent Seven laggard. Meta's slide kicked off with its third-quarter earnings report on Oct. 29. Another increase in Chief Executive Mark Zuckerberg's AI spending plan spooked investors. Shares slid 11% immediately following the report and have lost another roughly 9% in trading since then. Meta also raised $30 billion through a bond sale late last week."
"Meta's social media ad business is still posting strong results. Revenue grew 26% in Q3. But the concern is over the company's spending. Meta told analysts last week it expects its capital expenditures growth will be "notably larger" next year compared to 2025. This year's $71 billion estimated capex is already nearly equal to the 2024 number. The spending is an investment in data centers and computing power required to train AI models."
Meta Platforms shares have fallen in six of the last seven trading days, reducing the year-to-date gain to about 4%. The decline began after the Oct. 29 third-quarter report, where higher AI spending plans triggered an immediate 11% drop and roughly another 9% decline afterward. Meta completed a $30 billion bond sale late in the week. Internal documents showed an expected portion of 2024 revenue tied to ads for scams and banned goods. The company reported 26% ad-revenue growth in Q3 while forecasting notably larger capital expenditures next year to expand data centers and AI computing capacity.
Read at Investor's Business Daily
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