Meta shares tumble; investors wary of AI splurge

The huge checks Meta Platforms Inc. is writing to support its artificial intelligence ambitions arereminding some investors of the massive metaverse outlays that crippled the stock just a few years ago.

- By RYAN VLASTELICA

VISITORS pose near the newly unveiled Meta logo in Menlo Park, Calif., in 2021.

(NOAH BERGER APP via Getty Images)

Facebook's parent recently posted results that beat expectations on key metrics. But Wall Street's focus was on capital expenditures, which the company said would be as much $72 billion this year and “notably larger” in 2026, Then, on the earnings call, CEO Mark Zuckerberg downplayed concerns that Meta might be overspending on things like its Superintelligence Labs group, saying “it’s the right strategy to aggressively front-load building capacity.”

Now Meta shares just posted their worst four-day run since November 2022, falling almost 17% and wiping out $307 billion in market value. Not coincidentally, the 2022 selloff was also triggered by investors questioning its spending plans, ultimately sending the stock down 77% from a 2021 peak.

“This feels like a return to Meta’s old days of overspending on things that are frivolous or which don’t have appropriate return demands tied to them,” said Tiffany Wade, senior portfolio manager at Columbia Threadneedle Investments, which has about $714 billion in assets. “Investors are losing patience.”

Of course, even with the latest tumble, Meta’s stock remains up this year. That’s because until very recently, spending large sums on AI wasn’t seen as a negative, In fact, companies were rewarded for it because it showed they were staying competitive in the evolving tech landscape.