A prominent analyst says Meta’s recent slide is a buying opportunity, arguing the social media giant is entering a fresh investment cycle that will pay off as artificial intelligence demand scales across platforms and advertisers.
On Thursday, META plunged to as low as $650 before ending the trading day at $666 to record an 11% drop.
In a Bloomberg Technology interview, Jefferies equity research analyst Brent Thill says he sees the abrupt sell-off as investors rotating to stronger names rather than a fundamental concern in Meta.
“And so I think there’s a common pattern with tech investors right now. They’re just broader investors are moving their investments to other categories. And then they’re chasing momentum. It’s just the market’s so narrow. And you’re seeing this. So there was nothing that was fundamentally offline.”
Thill also notes that Meta is already seeing returns on their AI investments but may experience margin compression as the firm pours more money into artificial intelligence.
“And I think what Zuckerberg said last night on the call was, the investments in AI are paying off, and they just need more of them… Are we going to see margin compression? And then when does that return come back? But we already know that they have a return.
We saw with Microsoft, they’ve given us margin expansion even in the face of AI. So this whole concept that AI doesn’t pay off is silly.”
Thill maps a potential upside scenario tied to profitability and artificial intelligence rollout, pointing to earnings power and valuation multiples that would support a higher stock price.
“They’re going to do 30 dollars in earnings power. Put a 30 multiple on it. You’re $900 on the stock. It’s a buy on the pullback.”
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