White House Considers Cost Burden on Data Centers
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 day ago
0mins
Should l Buy META?
Source: CNBC
- Cost Internalization for Data Centers: White House trade advisor Peter Navarro stated that data center builders must absorb costs related to electricity and water usage, highlighting the government's concern over economic pressures that could impact companies like Meta.
- Rising Electricity Prices: With electricity prices spiking 6.9% year-over-year in 2025, public anxiety about the economy is increasing, as Navarro attempts to blame former President Biden, indicating the current administration's challenges in addressing inflation.
- Policy Response Measures: The Trump administration has signed a pact with several states urging major tech companies to finance $15 billion for new power plants to alleviate the strain data centers place on the grid, demonstrating proactive government intervention in energy policy.
- Election Outlook Impact: As the November 2026 midterms approach, polls show Democrats leading by 5.2 points, reflecting voter concerns over economic issues that could affect Trump's and the Republican Party's electoral prospects.
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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: 649.810
Low
655.15
Averages
824.71
High
1117
Current: 649.810
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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- Infrastructure Investment: Meta Platforms is planning a $10 billion data center in Indiana to support its expanding artificial intelligence infrastructure, expected to be operational in the coming years, thereby enhancing its competitive edge in the AI sector.
- 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
Bill Ackman's Strategic AI Investment Moves
- Concentrated Portfolio: Bill Ackman strategically bought Hilton stock during the pandemic, and although the stock appears expensive now, he sees significant potential for AI integration, reflecting confidence in future growth.
- AI Investment Returns: Ackman purchased Alphabet in 2023 when many viewed it as a net loser from the rise of AI chatbots, yet his investment has significantly outperformed the S&P 500, demonstrating strong returns in the AI sector.
- Hilton's Growth: Hilton's loyalty membership surged from 85 million to 243 million, with room count increasing from 913,000 to 1.3 million, and adjusted EBITDA soaring from $2.1 billion to $3.7 billion, showcasing robust market performance.
- Meta's AI Potential: Ackman's latest purchase of Meta stock highlights its business model as a clear beneficiary of AI integration, with expected annual EPS growth of 20%, and a current forward P/E of 22 presents an attractive entry point for investors.
See More
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- Strong Financial Performance: Despite Nvidia's (NVDA) 2% year-to-date stock decline, its latest earnings report indicates accelerating revenue growth in Q3, with strong guidance for Q4, suggesting robust market demand in the AI sector that could drive future sales growth.
- Giant Investment Plans: Tech giants like Amazon, Alphabet, and Microsoft have announced massive AI investments, with Amazon planning to spend around $200 billion despite only $11.2 billion in trailing twelve-month free cash flow, raising concerns about sustainability while potentially boosting Nvidia's sales in the short term.
- In-House Chip Programs Rising: Amazon's Trainium2 AI chip business is generating over $10 billion in annual revenue and is fully subscribed, indicating that competitors are rapidly developing their own chip solutions, which could erode Nvidia's market share, especially as price competition intensifies.
- Valuation Pressure: Nvidia's current P/E ratio stands at 45, with a forward P/E of 24; while the company is experiencing rapid earnings growth, any slowdown in AI chip demand or the emergence of lower-cost alternatives from competitors could pressure Nvidia's pricing power and margins, leading to further stock price declines.
See More
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- Tax Controversy: Senator Elizabeth Warren criticized Tesla for not paying any federal income taxes in 2025, questioning the fairness of such practices and highlighting public concerns over corporate tax transparency.
- Tax Breaks: A report from the Institute on Taxation and Economic Policy revealed that Tesla received over $1.1 billion in federal tax breaks last year, indicating the company's advantageous position within tax policy frameworks.
- Financial Data: While Tesla paid over $28 million in cash taxes to the government in 2025, it only contributed $48 million in current income taxes on $12.58 billion of U.S. income over the past three years, raising further questions about its tax strategies.
- Market Reaction: Despite Warren's criticisms, Tesla's stock gained 0.09% to close at $417.44 on February 13, reflecting market recognition of its favorable long-term price trend, although tax issues may impact investor confidence.
See More
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- Internal Testing Results: Meta's internal tests revealed a staggering 66.8% failure rate in blocking harmful content involving minors, prompting the company to halt the chatbot's release to ensure user safety.
- Legal Action Impact: The lawsuit filed by New Mexico Attorney General Raúl Torrez highlighted the AI system's poor performance in handling child sexual exploitation scenarios, underscoring significant AI safety concerns.
- Meta's Response: Meta spokesperson Andy Stone stated that the decision to not launch the product was due to the concerns raised during internal testing, emphasizing the importance of product testing before release.
- Market Reaction: Meta's shares fell by 1.55% to $639.77 on Friday, reflecting market concerns over the safety of its AI products, with a weak Momentum ranking indicating diminished investor confidence in the short term.
See More
Bill Ackman's Strategic AI Investments
- Significant AI Investment Returns: Bill Ackman purchased Alphabet stock in 2023, despite market skepticism regarding its position amid the rise of AI chatbots, and his investments have notably outperformed the S&P 500, demonstrating his foresight.
- Reason for Hilton Stock Sale: Ackman initially invested in Hilton in 2018, during which the company's loyalty membership surged from 85 million to 243 million, and its EBITDA increased from $2.1 billion to $3.7 billion over seven years; however, he opted to fully exit after a 350% stock price increase to seek higher return opportunities.
- AI Potential of Meta Platforms: Ackman revealed at the annual shareholder meeting that his latest AI stock purchase is Meta, believing its business model is a clear beneficiary of AI integration, with an expected 20% annualized earnings growth, indicating strong growth prospects.
- Advertising Revenue Growth: Meta's ad impressions rose by 18% in Q4, with average ad pricing increasing by 6%, thanks to its AI recommendation algorithms; Ackman sees this as a significant opportunity for expanding the advertising customer base, despite projected capital expenditures of $115 billion to $135 billion.
See More
