(Bloomberg) – Meta Platform Inc. keeps writing bigger checks in pursuit of its AI strategy, while traders keep cheering on to encourage expensive bets to continue to pay off.
The stock soared about 45% from its April lows and returned to near record territory. Last week, Yuan Final confirmation AI-scale investment of $14.3 billion, its leaders are joining a team Assembly CEO Mark Zuckerberg pursues artificial general intelligence. That’s after the Yuan Dynasty grow up Its capital expenditure is forecast to $72 billion from 2025.
“The amount of spending may be paused, but we believe dollar can use AI to boost revenue and accelerate growth.” Jake Seltzmanage Allspring LT big growth ETFs. “This shows Meta’s commitment to the investments it needs to maintain its leadership and despite the good running of the stock, we are still optimistic about long-term opportunities.”
Shares rose 2.6% on Monday. The company said earlier that it would Start displaying ads Internal WhatsApp messaging service.
After the income season Easing fear That big tech company could block expensive computers. The rebound marks a shift with earlier this year Nvidia Corp. is not satisfied with concerns about cheaply developed AI models in China.
Exchange-traded funds that track AI stocks, including Amazon.com Inc. rose 32% from its April 8 low, when U.S. President Donald Trump stopped tariffs on trading partners, triggering widespread stock rally. During that period, the world x Artificial Intelligence and Technology ETFs outperform the S&P 500 and high-tech Nasdaq By the end of the last time, 100 obtained about 20% and 27% respectively.
Allen Bond, portfolio manager at Jensen Investment Management, has bought dollar stock for the first time in recent weeks, partly due to the company’s aggressive spending on AI. He also cited improved operational efficiency and shifted from the so-called meta-corner, which prompted the company to change its name from Facebook in 2021.
“Using AI to optimize its data on revenue users is a clear application that allows Meta to attack while attacking letter Bond said it was playing defense. focus on Google parents may lose market share in lucrative search businesses, such as AI services like Chatgpt. “While AI is expensive, there is good evidence that it has indeed paid off so far.”
Meta’s investment capital return rate reached a record 31% in the first quarter, higher than the company’s 2023 level.
Meta uses AI to improve ad targeting and increase engagement in its apps, which also includes Instagram and WhatsApp. The Wall Street Journal recently reported that Meta hopes to use AI technology to fully automate advertising creation.
New Street Research analyst Dan Salmon estimates that the generated AI creative tools can increase Meta’s annual advertising revenue by 1% to 2% in the coming years and reach 4% by the end of the decade.
Still, long-term headwinds for AI are quite common expectations, which raises the question of how big a stock can rallies in the short term. Stocks trade at an estimated 25 times cheaper than other large stocks, but remain above their own average over the past decade.
Despite Wall Street’s very optimistic – 90% of the nearly 90% of analysts Bloomberg recommends buying are about the same as the average price target, indicating limited expectations for additional benefits.
“It’s still in the buy range because you’re getting quite a bit of growth at a fairly reasonable price,” said Greg Halter, research director for Carnegie Investment Advisors. “Nevertheless, a rally like this won’t go on forever, and it’s certainly not a screaming purchase not too long ago.”
This story was originally fortune.com
