ewsba.se
Meta Platforms, Inc. (NASDAQ:META) was among the stocks Jim Cramer highlighted, as he discussed the massive AI infrastructure buildout. Cramer highlighted why the stock is declining, as he commented:
Finally, how about Meta Platforms? Oh man, this one really bothered me. It’s being clubbed like a baby seal… Down more than 8% today. It’s a shame because the company really did report a good set of numbers: 33% revenue growth, big beat, 62% earnings per share growth, which was much higher than expected. But ultimately, the investors focused on a couple of negatives that are real negative. First, Meta’s family daily active people, their term for users, missed expectations, actually, shrank versus the previous quarter. Okay, look, they blamed the outages in Iran, blockages in Russia, but that was a cold comfort to shareholders. I don’t like blame. On top of that, Meta raised its full-year CapEx outlook by $10 billion, taking it to a range of $125 to $145 billion, for what, blaming the increase on higher component prices, especially for memory and data storage.
We saw a lot of those companies report in the last 24 hours, and they’re making too much money. But what can you do? It’s capitalism. I think Meta simply just didn’t do a good job of justifying their AI spending… It sure feels like Meta is suffering from the lack of cloud infrastructure business, though, something that’s been printing money for Alphabet, is good for Amazon, and Microsoft’s good, too. It’s very easy to explain how building data centers can make this kind of business more lucrative. Now, Meta would tell you that their spending is working too, pointing to how their AI tools are boosting the core advertising business…
And the daily users’ miss notwithstanding, Meta’s overall number’s pretty impressive. It’s their best revenue growth in five years, for heaven’s sake. Let’s not get too down about this thing. It’s just that Meta is not the same as the other big tech companies that are seeing their cloud infrastructure divisions explode. At the end of the day, Meta is spending heavily like the other hyperscalers, but it’s seeing the benefits come through an advertising business, not a cloud business, and investors just aren’t as impressed with that. Remember, a lot of that has to do with small and medium-sized businesses. People are always worried that they’re not going to do well if the economy slows down. Maybe the Meta sell-off today was overdone. I’m going to spend a lot of time with club members to try to figure that out. But it happened.
Meta Platforms, Inc. (NASDAQ:META) develops technologies and applications that connect people through social networking and messaging. The company’s portfolio includes Facebook, Instagram, WhatsApp, Messenger, Threads, and virtual and augmented reality products.
While we acknowledge the potential of META as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years
Disclosure: None. Follow Insider Monkey on Google News.