Vervolg :
Analysts who once feared that heavy Reality Labs investments would eat into the company’s profitability are moderating their concerns. Reality Labs posted a quarterly loss of $5 billion, but advertising and other core segments continue to deliver enough growth to more than offset that. Investors do still want to see Reality Labs eventually begin to break even or generate new revenue streams. This concern no longer appears to be urgent thanks to the strength of Meta’s main profit engines. Put simply, the company is a cash machine even as it invests heavily in unproven technologies. This financial elasticity is one reason why Meta is an attractive stock.
Metaverse
Meta's AI direction is so promising that its reality labs failures are no longer at the forefront of investor worries. (Meta)
Growth Opportunities in AI Infrastructure
All of these factors feed into what may be Meta’s best hidden advantage of its position as a future AI infrastructure provider. As open-source usage grows, demand for large-scale training and inference servers is likely to skyrocket. It doesn't cost a small sum to build data centers that are specialized for advanced AI workloads. Meta has detailed how it plans to continue investing in its infrastructure to handle the surge in AI applications. The company is even thinking about putting a greater reliance on its own custom ASICs. If the momentum behind open-source continues, organizations may increasingly rely on Meta’s cloud and hardware capabilities to deploy their open-source AI models. Meta may eventually evolve into something like an AI “utility” for businesses wanting to use open-source models at scale.
DeepSeek’s arrival in the market brightens that outlook, as it is likely to accelerate corporate AI adoption worldwide. If an enterprise can access a frontier model at a fraction of prior costs, that enterprise is more likely to incorporate AI into everyday operations. This, in turn, leads to higher demand for back-end compute and inference. Meta’s stated 2025 capital expenditures of up to $65 billion reflect an expectation that usage will ramp quickly. In effect, Meta stands ready to supply the “digital real estate” for the entire open-source community. By combining Llama’s open approach with a massive infrastructure build-out, Meta has a good chance to become the foundation for a global AI ecosystem.
Risks and Challenges
As bright as Meta’s prospects look, the company doesn't have unlimited immunity from downside threats. Regulatory scrutiny remains an ongoing concern. This is particularly true in Europe and the U.S., where policymakers have raised alarms about social media’s societal impact. Any new regulations that constrain data usage or impose new privacy mandates could negatively impact targeted advertising revenue. This would be terrible news for Meta, as advertising still makes up the bulk of its income. At the same time, the Reality Labs segment continues to generate billions in losses. While Meta can certainly handle these losses for now, investor patience could run out.
Competition from other tech giants also presents a risk. Even as Meta invests in open source, companies like Google (GOOG) (GOOGL), Microsoft (MSFT), and OpenAI are investing even more in proprietary models. It is far from guaranteed that organizations who have adopted Llama will not move on to alternatives in the future. Likewise, the success of DeepSeek is a sign of how quickly new players can disrupt the market.
Conclusion: A Forward-Looking Powerhouse
Meta’s strong finances, massive user base, and unwavering commitment to open source make it an undeniable force in the modern tech world. DeepSeek's success also offers further evidence that Meta's open-source path can generate both cost and performance advantages. Meta has already shown how well it can use advanced AI for advertising optimization. As such, it seems likely that the company will continue to integrate new AI tools at every level. For instance, the company could improve recommendation systems, expand user engagement, and eventually offer AI infrastructure on a broader scale.
None of this eliminates risk. Government oversight, ongoing losses in the Reality Labs division, and competition from other big tech players loom as serious challenges. Even so, the most recent earnings report demonstrates that Meta is far from a company in decline. On the contrary, the company is reshaping itself into one of the world’s foremost AI innovators. AI’s expansion and the collaborative advantage between DeepSeek-like innovations and Meta’s ecosystem means that the upside potential still outweighs the risks. At its valuation of $1.8 trillion and forward P/E of 28, Meta is still cheaper than many of its AI-focused big tech competitors. The fact that Meta is the only large tech company making any real effort in open-source AI makes it an even more solid long-term AI bet.
"AWS Certified AI Practitioner Early Adopter"I am a DevOps Engineer for a major, wholly owned subsidiary of a large-cap Fortune 500. I am a true subject-matter expert on the actual buildout, deployment, and maintenance of AI tools and applications. I have increasingly deep knowledge on the science behind generative AI systems as a result of first-hand experience with machine learning algorithms, model training, and model deployment.I am currently in the process of obtaining more advanced AWS machine learning certifications to further my AI and machine learning expertise. I contribute to Seeking Alpha as an outlet to share my AI and machine learning insights through an investment-focused lens.Per TipRanks (2/5/25)2 Year Timeframe#968 out of 30,634 Financial Bloggers #1,611 out of 40,003 experts
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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in META over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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I do not think Meta strategy is to provide data center services (alas Amazon, Microsoft, or Alphabet) but to provide free AI services to enhance customer engagement and hence ad revenues. The CEO pointed to possibile AI services sales in case of more sophisticated profes
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Meta is on a roll rising day after day. It touched all time high levels of $727 today.
Will it fall from these high levels or rise further to cross the $750 level this month, that is the question, any body willing to hazard a guess?