Bulls Circling Meta Again, But Investors Should Remember AI Capex Risks
Yahoo Finance Executive Editor Brian Sozzi analyzes the renewed bullish sentiment around Meta (META) ahead of its July 29 earnings report. The stock has rallied 12% in the past month, outperforming the S&P 500, driven by expectations of earnings upside from massive cost cuts (10% workforce reduction in May, job postings down 49% quarter-over-quarter) and a potential compute deal with Anthropic that could add $5 billion in 2027 revenues. BofA analyst Justin Post notes Meta's forward P/E of 20.75x is below its seven-year average of 22x, suggesting the market may have priced in worst-case AI capex scenarios. However, Sozzi warns that Meta remains in full invest mode and could raise its 2026 capital expenditure plans on July 29, which might again send the stock lower. The article highlights four key drivers for future sentiment: new revenue streams, advertising upside from LLM integration, LLM improvements, and chip cost savings.
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