Meta Extends Winning Streak Despite Broad Tech Weakness

Meta (META) shares witnessed a significant decline on Tuesday, jeopardizing a 20-session winning streak on Wall Street. The social media giant's stock plummeted over 3.8%. This positive streak had persisted since mid-January, extending through President Trump's inauguration, attended by CEO Mark Zuckerberg, and the company's earnings announcement on Jan. 29.

Despite the setback, Meta's stock remains up 17% over the past month and 22% year-to-date. The company's rally has continued amidst Zuckerberg's announcement that Meta will invest over $65 billion in capital expenditures (cap-ex) for AI data centers this year, a substantial increase from the $40 billion planned for 2024. Zuckerberg indicated that plans involve constructing a massive data center in Louisiana that would rival the size of Manhattan.

Meta's success emerges against a backdrop of weakness in other Big Tech companies in early 2025. Alphabet (GOOG, GOOGL), Apple (AAPL), and Microsoft (MSFT) have each declined more than 2% year-to-date, while Tesla (TSLA) has plummeted over 12%. Amazon (AMZN) has gained over 2% year-to-date but has fallen 2% over the last month.

Several factors contribute to Meta's resilience. Firstly, investors believe that the company's AI investments are yielding better returns than those of its Big Tech competitors, such as Google and Microsoft. Zeus Kerravala, founder and principal analyst at ZK Research, highlighted that Meta has effectively leveraged AI to enhance its core business, while others have struggled to diversify.

Meta is investing heavily in technologies that empower its advertising operations and engage users on its platforms. Zuckerberg noted during the company's Q3 earnings call that AI-driven feed and video recommendations have led to an 8% increase in time spent on Facebook and a 6% increase on Instagram this year alone. Additionally, CFO Susan Li revealed during Meta's Q4 call that 4 million advertisers are utilizing the company's generative AI tools to create ads, a significant increase from 1 million just six months prior.

Another positive development for Meta was the announcement by AI startup DeepSeek, which unveiled an open-source AI model that rivals the capabilities of ChatGPT and other leading Silicon Valley AI companies. DeepSeek's open-source approach aligns with Zuckerberg's decision to make Meta's Llama models open source. Analysts suggest that this strategy could generate a steady revenue stream in the future if large companies license the software.