On Thursday, Eastern Time in the United States, Meta’s stock price was sharply sold off. This was because the day before, the company raised its capital expenditure forecast for the third time this year, which panicked analysts and made them worry that its AI spending was “out of control”.

Meta’s stock price closed down 11.33% on Thursday, recording its largest single – day decline in three years, with its market capitalization evaporating by $214.7 billion (approximately 1.53 trillion yuan). According to data from Dow Jones Market Data, this sets the tenth – largest single – day market capitalization loss in the history of US enterprises, and is also the second – largest single – day market capitalization loss in Meta’s history – second only to the $232 – billion market capitalization loss it recorded on February 3, 2022.

Meta released its third – quarter 2025 financial report after the US stock market closed on Wednesday. In the latest financial report, the company raised its 2025 capital expenditure forecast and now expects capital expenditure to be between $70 billion and $72 billion, compared with the previous forecast range of $66 billion to $72 billion. The company also said that the capital expenditure growth next year may “increase significantly”, mainly due to its continuous spending on AI infrastructure construction.

Meta CEO Mark Zuckerberg said that this expenditure plan is a means to keep up with the demand for AI. He also said that if the company over – builds (AI infrastructure), it can absorb the additional computing power in the future.

Zuckerberg also said that the company’s AI advertising tools have achieved an annualized revenue of over $60 billion. He emphasized that this shows that the investment has at least paid off, which is crucial.

However, this is not enough to change investors’ concerns about the company’s possible over – spending.

Some analysts compare Meta’s latest spending plan with the company’s previous spending plans that were not favored by Wall Street (large – scale investment plans in the metaverse field). On October 27, 2022, the company’s stock price also plummeted about 25% due to concerns about spending.

The problem is not only that Meta has increased its investment in AI, but also that it is still uncertain whether the type of AI investment that Meta is so actively pursuing can generate corresponding financial returns.

Investment banks intensively lower Meta’s target price

It is worth noting that although Microsoft and Alphabet, the parent company of Google, which also released financial reports on the same day, are also increasing their AI spending, the market’s concern about Meta’s spending is obviously particularly intense. On the one hand, compared with Google and Alphabet, Meta’s AI investment return path is not clear enough. On the other hand, due to the impact of a one – time income tax expenditure, the company’s third – quarter profit was much lower than expected; in addition, its metaverse business segment Reality Labs had an operating loss of more than $4 billion in the quarter.

After Meta released its financial report, analysts from many investment banks lowered the target price of the company’s stock. Justin Post, an analyst at BofA Global Research, lowered his target price for Meta from $900 to $810, but reaffirmed the “buy” rating on the stock.

Justin Patterson, a stock analyst at KeyBanc Capital Markets, also lowered his target price for Meta from $905 to $875, while maintaining an “overweight” rating.

TD Cowen analyst John Blackledge lowered Meta’s target price from $875 to $810, but maintained a “buy” rating.

In addition, analysts such as Brian Nowak of Morgan Stanley, Eric Sheridan of Goldman Sachs, Ron Josey of Citi, and Deepak Mathivanan of Cantor Fitzgerald also lowered their target prices for Meta, while maintaining a “buy” or “overweight” rating on the stock.

Many investment banks have also lowered Meta’s rating. Oppenheimer lowered the stock’s rating from “outperform” to “neutral” on the 30th, citing increasing uncertainty about the company’s aggressive investment in the AI field.

Oppenheimer compared Meta’s huge AI spending with the company’s previous high – cost but low – return projects.

“Investing heavily in superintelligence with an unclear revenue outlook is no different from the metaverse spending in 2021 and 2022,” Oppenheimer analysts wrote in the report. They were referring to Meta’s recently established Superintelligence Labs, which focuses on developing AI that is expected to exceed human cognition.

Oppenheimer pointed out that Meta’s implied operating and capital expenditures in the fourth quarter are about 7% higher than Wall Street expectations. At the same time, the company expects that the capital expenditure growth in fiscal 2026 will be “significantly greater than that in 2025”, and the expense growth will be “significantly faster” than the 23% in 2025, all of which exceed Wall Street expectations.

Oppenheimer believes that “unless the performance outlook becomes clear before 2027, investors will find it difficult to reasonably explain Meta’s price – to – earnings ratio” because “high spending has offset strong revenue growth”. Oppenheimer analysts also compared Meta’s situation with that of Alphabet, saying that the latter has “a reasonable price – to – earnings ratio and predictable earnings”.

Benchmark analysts also lowered Meta’s stock rating from “buy” to “hold” on Thursday. The analysts of this bank said that they expect Meta’s stock price to “at most only fluctuate within a range before finding a reasonable return basis for the so – far out – of – control capital expenditure”.

The analysts wrote that although Meta’s advertising business is dominant, the company “still needs to prove that investments other than the advertising business can generate returns”.

Benchmark analysts said that Meta’s AI investments in other business areas, such as robotics and its Llama AI foundation model, “have a less certain outlook” because it faces competition from opponents with similar capital scales such as OpenAI, Google, and Tesla.