Meta is doubling down on AI, pumping $14.3 billion into Scale AI and raising its 2025 capex forecast to $72 billion. The stock jumped 2.6% Monday, riding a 45% bounce from April lows as traders cheer the tech giant’s aggressive AI push.
Scale AI’s CEO is joining CEO Mark Zuckerberg’s team targeting artificial general intelligence. Meta’s sharp spending rise follows a surge in AI stock enthusiasm, fueled by easing fears Big Tech would cut back on costly AI hardware after earnings season.
The company plans to start showing ads inside WhatsApp, adding to its AI-driven ad business. Meta’s return on invested capital hit a record 31% in Q1, more than doubling last year’s figures when metaverse spending was higher. AI helps Meta optimize ad targeting and engagement across Facebook, Instagram, and WhatsApp. 
Allen Bond from Jensen Investment Management recently bought Meta shares, citing improved efficiency and Meta’s pivot away from the metaverse to AI.
Jake Seltz, Allspring LT Large Growth ETF manager, said:
“The amount of spending might give some pause, but we’re confident Meta can use AI to drive revenue and accelerate growth.”
“This shows Meta is committed to making the investments it needs to maintain its leadership, and while the stock has had a nice run, we’re still bullish on the long-term opportunity.”
Dan Salmon of New Street Research estimates generative AI tools could boost Meta’s ad revenue growth by up to 4% by decade’s end.
Meta shares trade at 25 times forward earnings, pricier than its 10-year average but cheaper than other megacaps. Nearly 90% of analysts tracked by Bloomberg recommend buying, though average price targets suggest limited near-term upside.
Greg Halter, Carnegie Investment Counsel research director, added:
“It is still in the buy range, since you’re getting pretty strong growth for a pretty reasonable price.”
“Still, rallies like this don’t continue forever, and it certainly isn’t the screaming buy it was not too long ago.”
