Meta's Winning Streak Ends, But AI Investments Boost Stock
Shares of Meta Platforms (META) experienced a sharp decline of over 2.76% on Tuesday, marking the end of a 20-session winning streak. The drop represents its worst performance since December 18th. Despite the setback, Meta's stock remains resilient, having gained 17% over the past month and 22% year-to-date.
The company's strong performance can be attributed to its significant investments in artificial intelligence (AI). Meta is committed to spending $65 billion on AI-related capital expenditures this year, a substantial increase from its previous plan of $40 billion in 2024. CEO Mark Zuckerberg has outlined plans to build a massive data center in Louisiana, highlighting the company's ambitious AI expansion.
Meta's focus on AI is paying off. The company's AI-driven feed and video recommendations have resulted in an 8% increase in time spent on Facebook and a 6% increase on Instagram. Additionally, 4 million advertisers are now using Meta's generative AI tools to create ads, up from 1 million six months ago.
Meta's AI investments have also received validation from the open-source AI model developed by AI startup DeepSeek. This move aligns with Zuckerberg's decision to make Meta's Llama models open-source, suggesting a shift in the AI landscape towards collaboration and accessibility.
Analysts predict that Meta's AI strategy could generate a steady stream of revenue in the future as larger firms license their software.
While Meta's Big Tech peers like Google (GOOG, GOOGL), Apple (AAPL), and Microsoft (MSFT) have faced challenges in the early weeks of 2025, Meta's stock performance stands out as a testament to its ongoing innovation and commitment to AI.