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Meta: Superintelligence Requiring A Bigger Scale (Rating Downgrade)

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Update - June 30, 2025

Meta quickly rallied to a new high today at $748 on the Superintelligent Labs and quickly eversed in a potential sign of a top.

  • In a bid to lead the next wave of AI innovation, Meta (NASDAQ:META) is creating a “superintelligence” division dedicated to developing cutting-edge artificial intelligence technologies.
  • Meta Superintelligent Labs will be led by Alexandr Wang, the former CEO of Scale who Meta (NASDAQ:META) lured away after making a $14.3B investment for a 49% stake in the company. Along with Wang, a select group of Scale employees and researchers from OpenAI, Anthropic and Google (GOOG) have also joined the Meta superintelligence team.
  • In a letter to employees viewed by Bloomberg, Meta CEO Mark Zuckerberg said, “as the pace of AI progress accelerates, developing superintelligence is coming into sight. I believe this will be the beginning of a new era for humanity, and I am fully committed to doing what it takes for Meta to lead the way.” 

Finviz Chart

Original article posted on 6/29

  • Meta's aggressive AI and data center investments raise concerns about capital allocation and long-term returns, despite strong cash flows and a robust balance sheet.
  • The company's $14.3 billion investment in Scale AI and plans to raise $29 billion for AI infrastructure signal relentless spending to catch up with competitors.
  • Meta's capex is being outpaced by Alphabet and Microsoft, while ongoing Metaverse spending continues to pressure profitability without clear benefits.
  • The stock view is more Neutral after reaching $750 target, watching if Meta breaks above $740 or forms a double top, as excessive spending could weigh on future performance.

Meta Platforms, Inc. (NASDAQ:META) (TSX:META:CA) has been a leading AI pick since the lows a few years back, with a recent price target established at $750. The combination of the stock back to all-time highs and the uncontrolled spending is actually concerning. My investment thesis is more Neutral on the stock, with a key signal on whether the previous high around $740 is broken, or a double top is created.

Read the full article on Seeking Alpha. 

Disclosure: No position. Please review the disclaimer page for more details. 






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