Meta Stock Falls Despite Positive Streak; AI Investments Boost Company
Meta Platforms (META) experienced a decline in its stock value on Tuesday, ending a 20-day winning streak. The social media giant's shares dropped by 2.76%, marking its worst day since December 18.
Despite this setback, Meta's stock remains up 17% in the past month and 22% year-to-date. The company's strong performance continues despite CEO Mark Zuckerberg's announcement that Meta will invest heavily in AI data centers. The company plans to spend $65 billion in capital expenditures this year, a significant increase from the $40 billion it predicted for 2024.
Zuckerberg has outlined plans to construct a data center in Richland Parish, Louisiana, which will be large enough to cover a substantial portion of Manhattan. Meta's gains contrast with the struggles faced by its Big Tech rivals. Shares of Google parent Alphabet (GOOG, GOOGL), Apple (AAPL), and Microsoft (MSFT) have declined by more than 2% year-to-date, while Tesla (TSLA) has lost over 12% of its value. Amazon (AMZN) stock is up over 3% year-to-date but has fallen 1.7% in the past month.
Meta's strong performance is attributed to its focus on artificial intelligence investments. According to Zeus Kerravala, founder and principal analyst at ZK Research, Meta has effectively leveraged AI to enhance its advertising business and user engagement. The company has witnessed an 8% increase in time spent on Facebook and a 6% increase on Instagram solely due to improvements in its AI-driven feed and video recommendations.
Meta also received support from AI startup DeepSeek, which unveiled an open-source AI model that rivals the capabilities of ChatGPT and other leading AI companies. Open-sourcing DeepSeek's AI technology has validated Zuckerberg's decision to do the same with Meta's Llama models.
Analysts predict that the software licensing agreements with larger firms could generate a stable revenue stream for Meta in the future.