In a move that raised concerns among investors, Oppenheimer downgraded Meta Platforms (META) from 'Outperform' to 'Perform', citing rising uncertainty regarding Meta's intensive investments in advanced artificial intelligence.
Analyst Jason Helfstein likened Meta's current spending on super-intelligence projects to the massive investment phase in the metaverse in 2021 and 2022, when the company spent billions of dollars without achieving tangible returns in the short term.
According to the memorandum, Meta's operational and capital expenditures in the fourth quarter exceeded market estimates by about 7%, with expectations that 2026 expenses will be significantly higher than 2025. This trend raised questions about the feasibility and timing of returns from these massive investments.
Although Meta performed strongly in the advertising sector, with revenue growth of 25% year-over-year, the company itself pointed to a potential slowdown in the fourth quarter, which increased market caution.
On the other hand, Oppenheimer compared Meta and Alphabet (GOOG), considering that the latter has more stable earnings and a reasonable price-to-earnings multiple, and its growth in search may surpass Meta's in 2026.
After announcing the quarterly results, Meta's shares fell by more than 10% in pre-market trading, reflecting investor concerns about a mix of rapid growth and increasing spending.
💡 Summary:
Between Meta's ambition to build superintelligence and the market's ability to absorb its costs, the path to 2027 seems to be a real test of how well the company balances growth and spending.
Do you think Meta is betting on the future or repeating the mistakes of the metaverse? 🤔