"Meta Platforms ( NASDAQ:META) is spending heavily to advance its position in the AI race, perhaps far too heavily, such that the firm might be at risk of wasting cash that would have been better spent on other initiatives. Undoubtedly, the big, fat AI budget of Mark Zuckerberg's social-media titan has been the talk of the town, which has caused shares of Meta Platforms to lag the market over the past year."
"Year to date, shares of Meta Platforms are up a modest 11%. Compare that to a 16.6% gain for the S&P 500 or the 22.2% for the Nasdaq 100. While the latest bearish plunge might bring back memories of the great implosion of 2021 and 2022, I do think that Meta Platforms is shaping up to be a good buy now that it seems like the average retail investor is already expecting Meta Platforms' AI spend to result in modest gains."
Meta Platforms is investing heavily in AI, potentially risking cash that might have supported other initiatives. The large AI budget has coincided with shares lagging the S&P 500 and Nasdaq 100 year to date. Some analysts remain confident that the AI investment could drive future gains, while consensus concerns center on excessive spending and possible deep cuts if returns fail to materialize. Retail investor expectations appear to price in only modest AI-driven gains today, creating a scenario where quicker or larger-than-expected AI monetization could prompt a rapid share rebound. Ads and personalized feeds may amplify monetization potential.
Read at 24/7 Wall St.
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