Meta Platforms stock price rally has stalled this month as investors focused on its growth and spending on artificial intelligence. It initially peaked at a record high of $797 earlier this month and then pulled back to $740 today. So, is Meta stock a good buy today?
Top Meta Platforms news today
Meta Platforms, the parent company of Facebook and Instagram, has made several major headlines this year. It recently acquired Scale AI in a $14 billion deal as it continued its work on artificial superintelligence.
Meta has also made several hires as it seeks to build the best models in the industry. The latest hire was Frank Chu, a senior Apple executive who led AI teams focused on cloud infrastructure. He becomes the latest hire from Apple the company has poached.
Read more: Meta stock pulls back 3% amid AI, Metaverse concerns: here’s what analysts say
The other major Meta news was that the company signed a $10 billion deal with its biggest competitor: Google. It will hand Google $10 billion in the next six years for cloud computing services. This is a major win for Google now that it will host data of its biggest competitor.
Meta Platforms aims to become the biggest player in the AI space and is already spending billions of dollars. Its capital expenditure in Q2 was over $17 billion.
The challenge, however, is that it is competing with some of the biggest companies in the space.
Google, the biggest player in search, owns Gemini, which is integrated in its search and other services. Microsoft has Copilot and is a big investor in OpenAI, while Elon Musk’s xAI has continued to gain market share.
Meta’s main advantage is that it owns some of the most popular platforms in the industry. Combined, Facebook, Instagram, and WhatsApp are used by billions of people each day.
Meta has already unveiled its AI solutions to these apps and it hopes that they will become successful. The challenge, however, despite its popularity, data shows that its market share is not all that big. Also, it has not demonstrated how it will monetize these features.
Meta’s growth is continuing
Meta stock price has done well in the past few years despite its core platforms facing major challenges. Facebook, its flagship product, is no longer as popular as it used to in the past few years. It is especially not popular among young people, who prefer other social media platforms.
Meta has struggled to monetize WhatsApp, a company it acquired in 2014. It has also lost market share to a company like TikTok that has become the most active player in the social media space.
Still, on the positive side, Meta has used its position as the number 2 provider of online advertising to make a killing. The most recent results showed that the company made $47 billion in the second quarter, a 22% surge. Its operating margin rose to 43%.
Analysts are optimistic that Meta Platforms growth will continue. The average estimate is that its revenue in the third quarter will be $49.2 billion, a 21% YoY jump, and that its annual revenue will be $195 billion this year and $227 billion next year.
Meta stock price technical analysis
The weekly chart shows that the Meta stock price has surged from $86.75 in 2022 to $739 today. It has remained above all moving averages, a sign that bulls are in control.
The risk, however, is that it has formed a double-top pattern whose neckline is at $482, its lowest level in April. This pattern often leads to a bearish breakout, which could happen soon. If this happens, Meta could crash to below $600 in the coming months.
The alternative scenario is where the stock rebounds and hits the next psychological level at $1,000.
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