Meta’s stock drop of 12% sent shockwaves through the tech sector after the company announced plans to increase AI infrastructure spending to between $70 billion and $72 billion in 2025. The decline reflects growing investor sentiment concerns about an AI bubble, as Zuckerberg spending on artificial intelligence projects continues to escalate. The tech earnings season has further heightened such concerns, with analysts doubting that the massive capital spending will be used to produce any profitable gains or an indication of unsustainable investment cycle.
Meta Stock Drop Sparks AI Bubble Talk and Investor Sentiment Shift
The Meta stock drop wasn’t isolated to poor financial results. The company actually beat Wall Street expectations with earnings of $7.25 per share versus the projected $6.69 per share, and revenue rose 26% to $51.24 billion. However, the stock plunged in extended trading after CFO Susan Li announced the company is raising its spending forecast to between $116 billion and $118 billion, up from $114 billion to $118 billion.
Zuckerberg Defends Aggressive AI Investments
CEO Mark Zuckerberg had this to say about the company’s direction:
“Meta Superintelligence Labs is off to a great start and we continue to lead the industry in AI glasses. If we deliver even a fraction of the opportunity ahead, then the next few years will be the most exciting period in our history.”
Also Read: Meta Layoffs Hit AI Division Amid Leadership Shake-Up
Addressing AI bubble concerns directly, Zuckerberg stated:
“Being able to make a significantly larger investment here is very likely to be a profitable thing over some period.”
The CEO explained he is seeing a “pattern” that shows Meta will likely need to invest in even more computing infrastructure than initially anticipated. He also offered a contingency plan, noting that if AI doesn’t grow as expected, the company can repurpose infrastructure for other workloads “in a very profitable way.“
Analyst Perspectives on Tech Earnings and Investor Sentiment
Despite the Meta stock drop, some analysts remain optimistic. Zacks Investment Research analyst Andrew Rocco stated:
“I expect deep-pocketed institutional investors to defend the stock in the coming days at the $690 to $700 level.”
CFRA Research analyst Angelo Zino highlighted the strong advertising performance:
“Advertising momentum grew 26% in the quarter, benefitting from increased ad impressions, up 14%, and higher average pricing of around 10%. Better pricing was key to the beat.”
Also Read: Meta Platforms (META): How Q3 Earnings Will Shape the Stock
The AI bubble discussion is ongoing due to the fact that Zuckerberg expenditure is ever-growing. The corporation is signing large contracts with Google Cloud, Oracle, and CoreWeave on cloud computing. As much as tech earnings exhibited firm fundamentals, investor sentiments are apprehensive. They aren’t sure whether AI investments are worth the huge prices attached to them. The Meta stock fall is the experimental example of the AI aspirations of the whole industry.
