Meta Platforms is doubling down on artificial intelligence with massive capital outlays, and investors are cheering the bold strategy. After surging more than 40% from its April low, the stock is once again hovering near record highs—bolstered by confidence that CEO Mark Zuckerberg’s aggressive AI investments will continue to deliver.
Last week, Meta finalised a $14.3 billion investment in Scale AI, a move that brings the startup’s leader into a new team Zuckerberg is assembling to pursue artificial general intelligence (AGI). The deal followed an increased capital expenditure forecast for 2025—now as high as $72 billion.
“The amount of spending might give some pause, but we’re confident Meta can use AI to drive revenue and accelerate growth,” said Jake Seltz, portfolio manager at Allspring LT Large Growth ETF. “Meta is making the right long-term moves to maintain leadership.”
Investor sentiment has shifted sharply since earlier this year, when worries about cheaper AI models in China weighed on major tech stocks. The Global X Artificial Intelligence & Technology ETF has climbed 32% from its April low—outpacing the S&P 500 (up 20%) and Nasdaq 100 (up 27%).
For Meta, the rally is powered by AI optimism and a shift in investor focus away from the company’s costly metaverse ambitions. In Q1, Meta’s return on invested capital soared to 31%, more than double its 2023 level.
Meta now uses AI across its platforms—Facebook, Instagram, and WhatsApp—to enhance ad targeting, boost user engagement, and even automate ad creation. According to Dan Salmon of New Street Research, generative AI ad tools could boost Meta’s annual ad revenue growth by 1-2%, potentially rising to 4% by 2030.
New investors like Allen Bond, portfolio manager at Jensen Investment Management, say Meta’s proactive AI push sets it apart from rivals.
“Using AI to optimise user data for revenue is a clear application, one that allows Meta to play offence while Alphabet is playing defence,” Bond said, referencing fears that Google’s search dominance could be disrupted by AI tools like ChatGPT.
Meta’s shares now trade at 24.5 times estimated earnings—cheaper than other mega-cap tech peers but above its 10-year average of 22x. While nearly 90% of analysts tracked by Bloomberg rate the stock a “buy”, shares are hovering just under the average price target, hinting at limited near-term upside.
“It’s still in the buy range given the strong growth at a reasonable price,” said Greg Halter of Carnegie Investment Counsel. “But rallies like this don’t last forever—it’s no longer the screaming buy it was not too long ago.”
