Meta Platforms Shares Drop Following Analyst Comments
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 48 minutes ago
0mins
Source: Fool
- Stock Volatility: Meta Platforms' shares fell sharply on Thursday morning, dropping as much as 4%, and were still down 3.7% as of 10:49 a.m. ET, indicating a sensitive market reaction to analyst comments that could impact investor confidence.
- Cloud Infrastructure Plans: According to a Bloomberg report, Meta is developing blueprints for a cloud infrastructure business aimed at selling its excess computing power and providing broader access to its AI models, which will put it in direct competition with cloud giants like Amazon, Microsoft, and Google, increasing market competition.
- Earnings Potential Analysis: Analysts at Wolfe Research estimate that Meta could add 20% to its earnings per share for every gigawatt of compute power sold, but this will lead to capital expenditures rising from $160 billion to $200 billion, likely necessitating additional financing to support this expansion.
- Market Opportunity: Despite the high spending, the cloud market Meta is entering is expected to exceed $500 billion for the first time this year, representing a significant ongoing revenue growth opportunity, while its stock trades at a 21 times earnings ratio, significantly lower than its peers, attracting investor interest.
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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: 612.910
Low
655.15
Averages
824.71
High
1117
Current: 612.910
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.
Meta's Cloud Business Boosts Shares by 8.81%
- Stock Price Surge: Meta Platforms' shares rose by 8.81% to close at $612.91, primarily driven by cloud business reports that alleviated investor concerns regarding AI spending, indicating market confidence in future growth prospects.
- Surge in Trading Volume: The company's trading volume reached 45.1 million shares, approximately 159% above the three-month average of 17.4 million shares, reflecting strong investor interest in Meta's cloud business outlook, which may enhance future market performance.
- Increased Capital Expenditure Forecast: Meta has raised its 2026 capital expenditure forecast to between $125 billion and $145 billion, highlighting the company's commitment to AI infrastructure, prompting investors to assess whether this will yield sustainable financial returns.
- Earnings Report Anticipation: Investors are keenly awaiting Meta's next earnings report for insights into revenue growth, margins, and capital expenditures, particularly regarding whether AI infrastructure spending can deliver substantial financial returns.
See More
Meta Platforms Shares Drop Following Analyst Comments
- Stock Volatility: Meta Platforms' shares fell sharply on Thursday morning, dropping as much as 4%, and were still down 3.7% as of 10:49 a.m. ET, indicating a sensitive market reaction to analyst comments that could impact investor confidence.
- Cloud Infrastructure Plans: According to a Bloomberg report, Meta is developing blueprints for a cloud infrastructure business aimed at selling its excess computing power and providing broader access to its AI models, which will put it in direct competition with cloud giants like Amazon, Microsoft, and Google, increasing market competition.
- Earnings Potential Analysis: Analysts at Wolfe Research estimate that Meta could add 20% to its earnings per share for every gigawatt of compute power sold, but this will lead to capital expenditures rising from $160 billion to $200 billion, likely necessitating additional financing to support this expansion.
- Market Opportunity: Despite the high spending, the cloud market Meta is entering is expected to exceed $500 billion for the first time this year, representing a significant ongoing revenue growth opportunity, while its stock trades at a 21 times earnings ratio, significantly lower than its peers, attracting investor interest.
See More
Meta Platforms Ventures into Cloud Computing Amid Investor Concerns
- Cloud Business Development: Meta is reportedly developing a cloud infrastructure business aimed at selling its excess computing power and providing broader access to its AI models, which could position it directly against giants like Amazon, Microsoft, and Google.
- Investor Reaction: Concerns over future spending have led to a sharp decline in Meta's stock, dropping as much as 4% on Thursday morning, with shares still down 3.7% as of 10:49 a.m. ET, indicating market uncertainty regarding its new business model.
- Earnings Potential Analysis: Analysts at Wolfe Research estimate that Meta could increase its earnings per share (EPS) by 20% for every gigawatt of compute power sold, but predict capital expenditures will rise to $200 billion by 2027, necessitating a capital raise to support this spending.
- Market Opportunities and Risks: While entering a market projected to exceed $500 billion for the first time presents new revenue opportunities for Meta, its stock is currently trading at a significant discount at 21 times earnings compared to its tech peers, highlighting the balance investors must strike between risk and reward.
See More
Meta Explores Selling Compute Capacity
- Business Expansion Plan: Meta Platforms is considering selling its 'raw' compute capacity to external companies, a move that could create new revenue streams and further diversify its business model.
- Market Demand Response: By offering computing resources, Meta aims to meet the growing market demand, particularly in cloud computing and data processing, which is expected to enhance its competitiveness in the tech services market.
- Strategic Partnership Opportunities: This initiative may provide opportunities for Meta to establish strategic partnerships with other companies, facilitating technology sharing and resource integration, thereby improving overall business efficiency and innovation capabilities.
- Financial Impact Expectations: If successfully implemented, the sale of compute capacity could generate substantial financial returns for Meta, helping the company secure more funding for future investments and research and development.
See More
Meta Plans to Launch Cloud Computing Business
- Cloud Business Launch: Meta Platforms has announced plans to start a cloud computing business, which, despite emerging concerns about waning demand for computing capacity, could provide a new revenue stream, particularly targeting its vast Instagram and WhatsApp user base.
- Chip Market Volatility: Chipmaking stocks experienced a broad decline on Wednesday, although they rebounded slightly in early trading on Thursday; analysts suggest that the partnership between OpenAI and Cerebras is a more significant factor behind the dip than Meta's cloud initiative.
- Reduced Inference Costs: Cerebras' new AI chips utilize more abundant SRAM memory, significantly lowering inference costs, which may alleviate memory bottlenecks and diminish pricing power for DRAM producers like Micron, thereby impacting the entire hardware supply chain.
- Market Diversification Trend: Analysts note that as demand for inference capabilities rises, a growing number of startups and smaller companies are exploring various chip architectures, indicating a trend towards greater diversity in the inference market that could reshape competition and drive hardware and software companies to optimize their inference capabilities.
See More
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- Jobs Data Analysis: The June nonfarm payrolls increased by only 57,000, significantly below the Dow Jones estimate of 115,000, indicating a slowdown in economic recovery, which led to a positive market reaction with rising stock futures, suggesting investors are easing their expectations for the Fed's monetary policy.
- OpenAI Equity Proposal: OpenAI is considering offering a 5% stake to the U.S. government, with CEO Sam Altman arguing that this would allow the public to share in the benefits of AI, although this move may intensify regulatory scrutiny on its competitor, Anthropic.
- Palantir Rating Upgrade: DA Davidson upgraded Palantir from hold to buy with a price target of $175, implying nearly 40% upside, as analysts noted the company's impressive growth in data analytics, making its current valuation particularly attractive.
- Nvidia New Business Model: Nvidia is introducing a new business model for fast-growing AI startups by offering quick access to computing power in exchange for a share of future revenues, which is intriguing, but analysts believe Nvidia needs to ramp up stock buybacks to improve its stock performance relative to peers.
See More
Meta's Cloud Business Boosts Shares by 8.81%
- Stock Price Surge: Meta Platforms' shares rose by 8.81% to close at $612.91, primarily driven by cloud business reports that alleviated investor concerns regarding AI spending, indicating market confidence in future growth prospects.
- Surge in Trading Volume: The company's trading volume reached 45.1 million shares, approximately 159% above the three-month average of 17.4 million shares, reflecting strong investor interest in Meta's cloud business outlook, which may enhance future market performance.
- Increased Capital Expenditure Forecast: Meta has raised its 2026 capital expenditure forecast to between $125 billion and $145 billion, highlighting the company's commitment to AI infrastructure, prompting investors to assess whether this will yield sustainable financial returns.
- Earnings Report Anticipation: Investors are keenly awaiting Meta's next earnings report for insights into revenue growth, margins, and capital expenditures, particularly regarding whether AI infrastructure spending can deliver substantial financial returns.
See More
Meta Platforms Shares Drop Following Analyst Comments
- Stock Volatility: Meta Platforms' shares fell sharply on Thursday morning, dropping as much as 4%, and were still down 3.7% as of 10:49 a.m. ET, indicating a sensitive market reaction to analyst comments that could impact investor confidence.
- Cloud Infrastructure Plans: According to a Bloomberg report, Meta is developing blueprints for a cloud infrastructure business aimed at selling its excess computing power and providing broader access to its AI models, which will put it in direct competition with cloud giants like Amazon, Microsoft, and Google, increasing market competition.
- Earnings Potential Analysis: Analysts at Wolfe Research estimate that Meta could add 20% to its earnings per share for every gigawatt of compute power sold, but this will lead to capital expenditures rising from $160 billion to $200 billion, likely necessitating additional financing to support this expansion.
- Market Opportunity: Despite the high spending, the cloud market Meta is entering is expected to exceed $500 billion for the first time this year, representing a significant ongoing revenue growth opportunity, while its stock trades at a 21 times earnings ratio, significantly lower than its peers, attracting investor interest.
See More
Meta Platforms Ventures into Cloud Computing Amid Investor Concerns
- Cloud Business Development: Meta is reportedly developing a cloud infrastructure business aimed at selling its excess computing power and providing broader access to its AI models, which could position it directly against giants like Amazon, Microsoft, and Google.
- Investor Reaction: Concerns over future spending have led to a sharp decline in Meta's stock, dropping as much as 4% on Thursday morning, with shares still down 3.7% as of 10:49 a.m. ET, indicating market uncertainty regarding its new business model.
- Earnings Potential Analysis: Analysts at Wolfe Research estimate that Meta could increase its earnings per share (EPS) by 20% for every gigawatt of compute power sold, but predict capital expenditures will rise to $200 billion by 2027, necessitating a capital raise to support this spending.
- Market Opportunities and Risks: While entering a market projected to exceed $500 billion for the first time presents new revenue opportunities for Meta, its stock is currently trading at a significant discount at 21 times earnings compared to its tech peers, highlighting the balance investors must strike between risk and reward.
See More
Meta Explores Selling Compute Capacity
- Business Expansion Plan: Meta Platforms is considering selling its 'raw' compute capacity to external companies, a move that could create new revenue streams and further diversify its business model.
- Market Demand Response: By offering computing resources, Meta aims to meet the growing market demand, particularly in cloud computing and data processing, which is expected to enhance its competitiveness in the tech services market.
- Strategic Partnership Opportunities: This initiative may provide opportunities for Meta to establish strategic partnerships with other companies, facilitating technology sharing and resource integration, thereby improving overall business efficiency and innovation capabilities.
- Financial Impact Expectations: If successfully implemented, the sale of compute capacity could generate substantial financial returns for Meta, helping the company secure more funding for future investments and research and development.
See More
Meta Plans to Launch Cloud Computing Business
- Cloud Business Launch: Meta Platforms has announced plans to start a cloud computing business, which, despite emerging concerns about waning demand for computing capacity, could provide a new revenue stream, particularly targeting its vast Instagram and WhatsApp user base.
- Chip Market Volatility: Chipmaking stocks experienced a broad decline on Wednesday, although they rebounded slightly in early trading on Thursday; analysts suggest that the partnership between OpenAI and Cerebras is a more significant factor behind the dip than Meta's cloud initiative.
- Reduced Inference Costs: Cerebras' new AI chips utilize more abundant SRAM memory, significantly lowering inference costs, which may alleviate memory bottlenecks and diminish pricing power for DRAM producers like Micron, thereby impacting the entire hardware supply chain.
- Market Diversification Trend: Analysts note that as demand for inference capabilities rises, a growing number of startups and smaller companies are exploring various chip architectures, indicating a trend towards greater diversity in the inference market that could reshape competition and drive hardware and software companies to optimize their inference capabilities.
See More
Weaker Jobs Report Sparks Positive Market Reaction
- Jobs Data Analysis: The June nonfarm payrolls increased by only 57,000, significantly below the Dow Jones estimate of 115,000, indicating a slowdown in economic recovery, which led to a positive market reaction with rising stock futures, suggesting investors are easing their expectations for the Fed's monetary policy.
- OpenAI Equity Proposal: OpenAI is considering offering a 5% stake to the U.S. government, with CEO Sam Altman arguing that this would allow the public to share in the benefits of AI, although this move may intensify regulatory scrutiny on its competitor, Anthropic.
- Palantir Rating Upgrade: DA Davidson upgraded Palantir from hold to buy with a price target of $175, implying nearly 40% upside, as analysts noted the company's impressive growth in data analytics, making its current valuation particularly attractive.
- Nvidia New Business Model: Nvidia is introducing a new business model for fast-growing AI startups by offering quick access to computing power in exchange for a share of future revenues, which is intriguing, but analysts believe Nvidia needs to ramp up stock buybacks to improve its stock performance relative to peers.
See More
