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APMeta AI spending Meta stock crash 2025: Meta Platforms is back in the spotlight for its massive spending, this time on artificial intelligence, as its stock plummeted almost 17% over four days, wiping out $307 billion in market value, as per a report. The selloff has reignited memories of the company’s 2022 metaverse-related crash, when investors questioned heavy outlays and sent the stock tumbling 77% from its 2021 peak, as per a Bloomberg report.Why Did Meta’s Stock Drop So SharplyThe tech giant reported earnings last week that beat expectations on key metrics, but Wall Street quickly zeroed in on its massive capital expenditures. Meta said it plans to spend up to $72 billion this year, with “notably larger” outlays expected in 2026. CEO Mark Zuckerberg defended the strategy, calling it “the right strategy to aggressively front-load building capacity,” as quoted in the report.Are Investors Losing Confidence in Meta’s AI SpendingDespite these reassurances, investors are growing uneasy. Tiffany Wade, senior portfolio manager at Columbia Threadneedle Investments, said, “This feels like a return to Meta’s old days of overspending on things that are frivolous or which don’t have appropriate return demands tied to them," adding, "Investors are losing patience," as quoted by Bloomberg.ALSO READ: Got unwanted texts? Cell phone users could get $2,000 payout, but you have just weeks to claim itWhy Investors Are Comparing Meta’s AI Plans to the Metaverse CrashThe recent drop comes even as Meta shares remain up 7.5% year-to-date, as per the report. In the past, spending heavily on AI was viewed positively, signaling competitiveness in a fast-evolving tech landscape. Zuckerberg has long highlighted AI’s benefits, particularly in improving ad targeting and engagement. Yet the mounting costs without immediate payoffs are rattling investors.Live EventsSeveral analysts have drawn parallels between current AI investments and past metaverse spending. Wade noted that, “you can draw some parallels between the spending on Superintelligence and Reality Labs,” adding, “Both are long-dated projects that don’t have an immediate payback and where the ultimate return is unclear,” as quoted by Bloomberg.Jason Helfstein of Oppenheimer echoed this, downgrading Meta’s stock by pointing out that “significant investment in Superintelligence despite unknown revenue opportunity mirrors 2021/2022 metaverse spending," as quoted in the report.ALSO READ: Polish miracle: The fastest-growing economy in Europe? Here’s how the once-isolated country broke into the Top 20Is Meta’s AI Strategy Different from Microsoft and Other Tech GiantsMeta’s situation is distinct from other Big Tech firms like Microsoft, Amazon, or Alphabet. Microsoft’s AI spending ties directly to growth in its Azure cloud business, offering a clearer path to revenue. Meta, however, lacks a comparable enterprise-focused segment, creating a perception of higher risk. Stefan Slowinski, BNP Paribas’ global head of software research, explained, “There’s a real lack of diversification in the business model,” adding, “It has failed to expand into any real enterprise business, and we have the strategic error of the metaverse," as quoted by Bloomberg.ALSO READ: Why US market is down today? Key points investors need to take note as Dow, S&P 500 and Nasdaq fallHow Are Meta’s Financial Metrics Changing in 2025Financially, the company’s return on invested capital fell to 25% in Q3 from a record 32% in the previous quarter, though it remains above 2023 levels. Slowinski added, “The only way it can monetize hundreds of billions of capex is through additional advertising,” as quoted in the report.Other concerns for investors include off-balance-sheet debt and large write-offs, which widened the gap between net and pro-forma earnings. Bank of America noted that such trends “can highlight deteriorating earnings quality, and has historically been accompanied by weaker returns,” as quoted in the report.ALSO READ: BTC crash alert: Why Bitcoin price dropped to $107,000 and why experts warn it could fall to $88,000Is Now the Right Time to Buy Meta SharesDespite these headwinds, the company’s longer-term outlook is encouraging. Revenue is expected to grow 21% this year and remain in double digits through 2028, while net earnings growth, flat in 2025, is projected above 25% next year. Additionally, Meta shares trade at 19 times estimated earnings, a discount compared with the S&P 500’s 23 and its own 10-year average, making it the cheapest of the so-called “Magnificent Seven” tech stocks, as per the report.For some investors, the current selloff is seen as a buying opportunity. David Katz, chief investment officer at Matrix Asset Advisors, said, “The metaverse was a bet that didn’t pan out,” adding, “There is a much clearer roadmap to leveraging AI for market advantages and better profitability. Outside of it being a boatload of money without much accountability for Zuckerberg, that’s where the similarities stop,” as quoted by Bloomberg.FAQsWhy did Meta’s stock lose $307 billion in value?Because investors are worried about Meta’s massive AI spending plans and uncertain returns.Is this crash similar to Meta’s metaverse collapse in 2022?Yes, analysts say the current AI spending mirrors the heavy metaverse outlays that once tanked the stock.Add as a Reliable and Trusted News Source Add Now! 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