Meta Stock Dips as AI Spending Hits Margins, Triggers Short-Term Selloff

This article first appeared on GuruFocus.

Meta Platforms (NASDAQ:META) fell about 2% to close near $627 on Tuesday, extending its post-earnings pullback as investors weighed rising artificial intelligence spending against margin compression.

The decline comes as traders across large-cap tech adopt a cautious stance, pricing in heavier capital expenditures tied to Meta's expanding AI infrastructure. Analysts said the near-term impact on profits is expected, given the company's push to build data centers, train new models, and scale generative AI tools across its platforms.

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Technical indicators show the stock hovering near the $620$630 support area, a key demand zone that could determine short-term direction. The 200-day moving average around $679 remains the next significant resistance level.

Despite recent weakness, analysts maintain confidence in Meta's long-term AI roadmap. The company's ongoing development of its Llama models and deeper integration of generative tools into Instagram and WhatsApp are viewed as strategic moves to strengthen ad targeting and platform engagement.

According to market strategists, although the AI-based expenditure is exerting downward pressure on margins, but Meta is still a leader in the industry. They also remarked that the stabilization around $620 would be a welcome event by institutional investors who would want to gain exposure to the growth concepts of AI.

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