Investors seem to have forgotten that Meta’s (META) ambitious AI capital expenditures drilled the stock when the company reported first quarter earnings in April.
And there are two reasons why sentiments have turned around since then
Quick insight: The bulls are circling Meta ahead of its July 29 earnings report, in part because of potential profit upside from massive cost cuts. “With 10% workforce reduction in May and job postings down 49% quarter over quarter in 2Q, we expect EPS upside,” BofA analyst Justin Post said in a note. The other component is the potential for CEO Mark Zuckerberg to signal strong demand for 2027, helped by a new tie-up with Anthropic (ANTH.PVT) on compute. Post added, “Following reports of a potential compute deal with Anthropic, we are adding $5 billion in 2027 revenues for additional AI capacity benefits (expect monetization via ads, subscriptions or enterprise sales).” Meta stock has rallied 12% in the past month, outperforming the slight decline in the S&P 500 (^GSPC) during that same stretch.
The stock surpassed its late April lows while also rising above its key 200-day moving average earlier this month, Yahoo Finance AlphaSpace data shows. The stock is still down 2% on the year, however. AlphaSpace check-in: A pedestrian valuation for Meta could also be enticing to the bulls.