META.O Hits 20-Day Low Amid AI Concerns
Written by Emily J. Thompson, Senior Investment Analyst
Updated: May 21 2025
0mins
Should l Buy META?
Source: Yahoo Finance
Shares of META.O declined sharply today, hitting a 20-day low as investor sentiment soured over the tech sector's reliance on artificial intelligence. This technical breakdown signals increased bearish momentum, reflecting broader anxieties following Alphabet's CEO's warning about potential overinvestment in AI. The caution has contributed to a sell-off in AI-related stocks, including Meta, as concerns grow over the sustainability of valuations amid disappointing performance metrics from major players in the sector.
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Analyst Views on META
Wall Street analysts forecast META stock price to rise
44 Analyst Rating
37 Buy
6 Hold
1 Sell
Strong Buy
Current: 639.770
Low
655.15
Averages
824.71
High
1117
Current: 639.770
Low
655.15
Averages
824.71
High
1117
About META
Meta Platforms, Inc. is building human connections, powered by artificial intelligence and immersive technologies. The Company's products enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality (VR) and mixed reality (MR) headsets, augmented reality (AR), and wearables. It also helps people discover and learn about what is going on in the world around them, enabling people to share their experiences, ideas, photos, videos, and other content with audiences ranging from their closest family members and friends to the public at large. The Company's segments include Family of Apps (FoA) and Reality Labs (RL). FoA segment includes Facebook, Instagram, Messenger, WhatsApp and Threads. RL segment includes its virtual, augmented, and mixed reality related consumer hardware, software and content. Its product offerings in VR include its Meta Quest devices, as well as software and content available through the Meta Horizon Store.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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See More
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See More
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See More
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- AI Strategy Shift: The company is shifting its AI approach from open-source models to more closed systems, aimed at supporting future AI products and services, which could impact interactions among users, partners, and regulators.
- Stock Performance: Meta's stock is currently trading at approximately $639.77, with a 272.7% gain over the past three years and a 147.5% gain over five years, despite a 12.9% decline over the past year; this infrastructure investment may lay the groundwork for future growth.
- Increased Capital Needs: The Indiana data center and the shift towards closed-source AI underline the higher capital requirements associated with future AI products and services, prompting investors to monitor the returns on these investments and their impact on Meta's 26.8x P/E ratio.
See More
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- Reduction Trend: According to the latest 13F filing, Tiger Global reduced its holdings in several major AI tech companies in Q4 2025, indicating a reassessment of the lofty valuations of AI-driven giants after years of rapid growth and heavy spending.
- Nvidia Holdings Change: As of December 31, 2025, Tiger Global's shares in Nvidia decreased to 11.01 million, down from 11.71 million on September 30, 2025, yet Nvidia remains one of its largest equity positions, reflecting a cautious approach towards near-term valuations.
- Mixed Market Signals: Despite strong AI spending and earnings growth, the market has shown mixed signals regarding the sustainability of AI-led gains, with some analysts warning of bubble risks in parts of the tech sector, particularly among the so-called
See More
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- Meta Expands Commitment: Meta Platforms announced a new deal to purchase tens of billions of dollars worth of Nvidia chips and hardware for its AI needs, further solidifying their decade-long partnership and expected to significantly boost Nvidia's sales growth.
- Portfolio Update: Nvidia disclosed new stakes worth $2.3 billion in Snap and $1.1 billion in Nokia, while also revealing a $7.9 billion stake in Intel, showcasing its strategic positioning and confidence in the semiconductor market.
- Positive Market Reaction: Nvidia shares rose 1.4% in early premarket trading on Wednesday, reflecting market optimism regarding the new agreement with Meta, while Intel's stock also gained 1% due to Nvidia's investment, indicating investor confidence in the semiconductor sector.
- Hedge Fund Turns Bearish: Despite the stock rally, New York-based Stanphyl Capital has taken a short position on Nvidia, arguing that some hyperscalers will announce reduced capex, potentially leading to a significant drop in Nvidia's stock price, highlighting market uncertainty ahead.
See More
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- Market Sentiment Shift: Retail sentiment towards the SPDR S&P 500 ETF (SPY) has flipped from 'bearish' to 'bullish' in just one day, indicating a growing confidence among investors that could lead to increased capital inflows in the near term.
- Nvidia Strategic Shift: Nvidia has exited Applied Digital and Arm Holdings while deepening its partnership with Meta by committing to millions of processors, signaling a strategic pivot towards AI and social media that may impact its market share and competitive positioning.
- Tesla Compliance Action: Tesla has avoided a 30-day sales suspension in California after taking 'corrective action' in the marketing of its Autopilot and Full Self-Driving features, which will help maintain its brand image and market position.
- Economic Data Focus: Investors are closely watching the release of housing starts at 8:30 AM ET and industrial production data at 9:15 AM, as these figures will provide crucial signals about economic health that could influence the Federal Reserve's monetary policy decisions.
See More
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- Surge in Capital Expenditure: In 2025, major tech companies like Amazon, Alphabet, Meta, and Microsoft are projected to spend $360 billion on capital expenditures, with expectations to rise to nearly $600 billion in 2026, indicating robust growth in AI demand that enhances market outlook for these firms.
- Memory Chip Shortage: A persistent shortage of high-bandwidth memory (HBM), DRAM, and NAND chips has led to soaring prices, and experts predict this shortage will continue into 2027, impacting operational costs and profitability for data centers reliant on these components.
- Micron Technology's Revenue Surge: Micron Technology reported record revenue of $13.6 billion in its fiscal 2026 first quarter, a 57% year-over-year increase, with adjusted earnings per share soaring to $4.78, reflecting its strong competitive position in the memory market amid rising demand.
- Optimistic Future Outlook: Micron anticipates second-quarter revenue of $18.7 billion, up 132% year-over-year, and adjusted EPS of $8.42, up 440%, highlighting the company's growth potential driven by AI, despite inherent cyclical risks in the memory market.
See More
Tech Giants' Record Capex Spending for AI
- Surge in Capex: In 2025, major tech companies are projected to spend $360 billion on capital expenditures, with estimates soaring to nearly $600 billion in 2026, reflecting a strong anticipation of AI demand, particularly with Amazon, Alphabet, and Meta budgeting $200 billion, $175 billion, and $115 billion, respectively.
- Memory Shortage Impact: The ongoing shortage of data center memory chips has led to skyrocketing prices, with projections indicating that memory costs could account for 45% of the increase in data center spending in 2026, significantly impacting AI processing capabilities, despite major manufacturers reallocating resources to meet demand.
- Micron's Strong Performance: Micron Technology reported record revenue of $13.6 billion in its fiscal Q1 2026, a 57% year-over-year increase, with adjusted EPS soaring to $4.78, up 167%, showcasing robust profitability amid the memory shortage backdrop.
- Optimistic Future Outlook: Micron anticipates Q2 revenue of $18.7 billion, a 132% year-over-year increase, with adjusted EPS projected at $8.42, up 440%, as management expresses confidence in sustained demand, although the cyclical nature of the memory business remains a risk to monitor.
See More
