Meta’s AI Billions Spark Investor Déjà Vu - Is This Another Metaverse-Sized Gamble?

Billions flowing into artificial intelligence while investors watch with familiar unease.

The Ghost of Metaverse Past

Remember when virtual reality was going to change everything? Meta certainly does—and they're betting the farm that AI won't follow the same trajectory. Same massive investment, different technological frontier.

Numbers Don't Lie—But They Do Repeat

We're talking billions here. Not millions, not hundreds of millions—actual billions with a capital B. The same scale that made Wall Street nervous about the metaverse now fuels the AI revolution.

Wall Street's Collective Eye Roll

Because nothing says 'solid investment strategy' like doubling down on massive, unproven technological bets while your core business faces existential threats. It's the Silicon Valley equivalent of buying lottery tickets with your rent money—what could possibly go wrong?

The AI Gold Rush or Fool's Gold?

Every tech giant wants their slice of the artificial intelligence pie. But when the recipe calls for burning through cash reserves that would make small nations blush, maybe it's time to ask if we're building the future or just repeating past mistakes.

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However, this has caused Meta’s stock to drop about 17% over the past four days, its worst slide since late 2022, which also happened when investors questioned the company’s spending plans. Understandably, some investors believe Meta is taking on too much risk. For instance, Tiffany Wade from Columbia Threadneedle Investments said that it feels like Meta is overspending again without showing clear proof that the spending will pay off. Another concern is that Meta doesn’t have a large enterprise cloud business that could benefit directly from AI demand.

Notably, Stefan Slowinski at BNP Paribas also said Meta still relies mostly on advertising and hasn’t succeeded in expanding into new business areas. Nevertheless, Meta is expected to grow revenue by 21% this year and continue growing at strong rates through 2028. In addition, the stock remains relatively cheap at 19 times forward earnings. Because of this, some investors, such as David Katz of Matrix Asset Advisors, see the recent stock decline as a potential buying opportunity by saying that, unlike the metaverse, AI has a clearer path to generating profits over time.

Is Meta a Buy, Sell, or Hold?

Overall, analysts have a Strong Buy consensus rating on META stock based on 34 Buys, six Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average META price target of $843.56 per share implies 32% upside potential.