Meta’s Massive AI Bet Sends Investors Fleeing

The technology sector witnessed a dramatic sell-off as Meta unveiled spending plans that left the market reeling. Contrary to disappointing earnings, it was the announcement of staggering capital expenditure toward artificial intelligence that triggered investor alarm. The social media giant revealed intentions to channel up to $72 billion into AI during 2025, with projections for 2026 indicating a "significantly larger" outlay. An overarching $600 billion plan for U.S.-based AI data centers, spread across three years, has raised fundamental questions about the viability of such colossal investment without a clear path to monetization.

Market reaction was swift and severe. Following the disclosure, Meta shares suffered their most brutal four-day decline since November 2022, plummeting 17 percent. The erosion wiped out approximately $307 billion in market capitalization. The sheer scale of proposed spending isn't the only concern unnerving shareholders. Many are drawing uncomfortable parallels to the Metaverse debacle, where CEO Mark Zuckerberg incinerated tens of billions without demonstrating a clear return on investment.

Unlike competitors Microsoft and Amazon, which possess substantial cloud computing divisions that can directly monetize AI infrastructure, Meta lacks this complementary business line. The company faces astronomical expenditures with uncertain refinancing prospects. This fundamental uncertainty continues to drive the stock's downward trajectory.

Should investors sell immediately? Or is it worth buying Meta?

Strong Core Performance Overshadowed by Spending Concerns

Paradoxically, Meta's operational business demonstrates remarkable health. Third-quarter revenue surged 26 percent to $51.24 billion, exceeding market expectations. The advertising division shows particular vigor, with a 14 percent increase in ad impressions coupled with a 10 percent rise in average price per ad. Even amid rising costs, the company maintained a robust operating margin of 40 percent.

This divergence between strong current performance and uncertain future investment has divided financial experts. As share prices collapse, numerous market analysts perceive the sell-off as a buying opportunity, maintaining price targets substantially above current trading levels. Conversely, other voices caution that the exploding cost structure is now consuming a significant portion of quarterly earnings. Meta finds itself torn between demonstrating present operational strength and placing multibillion-dollar wagers on its technological future.