Meta Platforms: Brace For Pain In 2025

Summary:

• Meta’s aggressive AI infrastructure investments, with CAPEX expected to hit $40 billion in 2024, raises concerns about free cash flow and profitability.
• Meta’s CAPEX for AI could potentially reach $55-60 billion in 2025, according to my estimates, bringing Meta’s free cash flow may drop to $30 billion.
• Meta must still prove that the company can achieve sustainable ROI and value accumulation on the backdrop of its heavy AI investments.
• Heading into 2025, I think the risk-reward for Meta has shifted negatives; and I think it may be wise to reduce exposure. I assign a “Sell” rating.

I am concerned for Meta Platforms (NASDAQ:META) stock heading into 2025. In my view, investors are nonchalant about the social media giant’s CAPEX investments, although the issue has briefly spooked investors in Q2 this year.

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Analyst’s Disclosure: I/we have a beneficial long position in the shares of META either through stock ownership, options, or other derivatives. 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.

Not financial advice

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