Meta Platforms Inc. is channeling billions into artificial intelligence dreams, only to watch its stock plummet like a poorly coded VR avatar tripping over its own headset. Investors, fresh off the metaverse hangover, are side-eyeing CEO Mark Zuckerberg’s “aggressively front-load” spending spree, fearing it’s just another fancy way to say “oops, we did it again.”
Last week, Meta unveiled earnings that should have sparked champagne toasts—beating Wall Street’s forecasts on revenue and user engagement. Yet the party poopers zeroed in on the fine print: capital expenditures ballooning to $72 billion this year, with 2026 promising an even heartier feast of fiscal fireworks.
Zuckerberg brushed off the jitters during the earnings call. “It’s the right strategy,” he declared, as if dropping $72 billion on Superintelligence Labs was akin to splurging on artisanal coffee rather than a corporate caffeine crash.
The market’s response? A four-day stock swoon, the worst since November 2022, erasing a cool $307 billion in market value. That’s enough cash to buy every human on Earth a lifetime supply of Zuckerberg’s signature hoodies—twice over.
Déjà vu all over again, folks. That 2022 nosedive? Also sparked by spending skepticism, culminating in a 77% stock plunge from 2021 highs. History doesn’t repeat, but it sure rhymes—with a comically expensive echo.
“This feels like Meta’s old days of overspending on things that are frivolous,” quipped Tiffany Wade, senior portfolio manager at Columbia Threadneedle Investments, overseeing $714 billion in assets that could fund a small nation’s AI therapy sessions. Investors, she added, are losing patience faster than a toddler with a dead iPad battery.
Yet, in a cheeky rebound, shares ticked up 0.2% on Wednesday—like a boxer wobbling back to his corner after a haymaker. Year-to-date, Meta’s stock is still nursing a modest 7.5% gain, a reminder that AI hype was once the golden ticket, not the runaway train.
Zuckerberg champions AI as the secret sauce for sharper ad targeting and stickier scrolls through your feed. But with expenditures climbing like an overachieving StairMaster, the payoff feels as distant as that metaverse condo you never bought.
Meta’s Superintelligence push, Wade notes, mirrors the metaverse’s Reality Labs saga: long-term gambles with returns murkier than a foggy Oculus lens. No immediate windfalls, just promises of tomorrow’s tomorrows.
Wall Street’s chorus swells. Oppenheimer analyst Jason Helfstein downgraded the stock post-earnings, likening Superintelligence bets to 2021’s metaverse mania—minus the VR nausea, but plus the unknown revenue roulette.
Meta’s not alone in this AI spending chill. Microsoft dipped too, though milder, buoyed by Azure’s cloud profits acting like a safety net. Amazon and Alphabet? They rallied, their enterprise arms flexing AI muscles Meta can only envy from the sidelines.
“There’s a real lack of diversification,” sighs Stefan Slowinski, global head of software research at BNP Paribas, the lone sell-rated holdout pre-earnings. Blame the metaverse detour for stranding Meta in consumer quicksand, far from enterprise gold mines.
Return on invested capital? It dipped to 25% in Q3 from a record 32%—still robust, but a slip that whispers “metaverse ghosts” louder than a haunted data center.
Monetizing this capex tsunami? “Only through more ads,” Slowinski predicts, with the patience of a saint waiting for Zuckerberg’s next pivot. It’ll happen, sure—just not before your grandkids graduate VR college.
Other red flags flutter: off-balance-sheet debt and write-offs gapping net from pro-forma earnings, as Bank of America flagged on Nov. 2. It’s like hiding veggies in dessert; tasty short-term, but the crash diet looms.
Bright spots flicker, though. Revenue’s eyeing 21% growth this year, double-digits through 2028. Net earnings, flat in 2025, could sprint 25% next year—like a sloth discovering Red Bull.
Valuation-wise, Meta’s a steal at 19 times earnings, undercutting its 10-year average and the S&P 500’s 23. Cheapest of the Magnificent Seven? It’s the budget superhero cape in a sea of premium spandex.
The selloff’s “baffling,” insists David Katz, chief investment officer at Matrix Asset Advisors, minding $1.4 billion. To him, it’s buy-low catnip: metaverse flopped, but AI’s roadmap gleams clearer than a fresh algorithm.
“Outside of Zuckerberg’s unaccountable boatload of bucks,” Katz chuckles, “the similarities evaporate.” Meta didn’t comment—probably too busy building that superintelligence to dodge our pesky queries.
As shares stabilize, one wonders: Is this prudent prep for AI dominance, or just Zuckerberg’s sequel to “The Social Network”—titled “The Spendy Sequel”? Investors, buckle up; the front-loading’s just getting fun.
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