Meta Stocks Soar 2.6% as Mark Zuckerberg’s AI Investment Excites the Market

Meta stocks soared 2.6% on June 16. According to Yahoo Finance, the stock surge came soon after the social media giant invested $14.3 billion in data labelling startup, Scale AI last week. CEO Mark Zuckerberg’s investment in the AI startup saw the company’s CEO Alexandr Wang join Meta’s AI team. The latest investment saw Meta acquire a 49% stake in Scale AI.

Aggressive AI Spending

Meta’s Scale AI investment came soon after the US big tech company increased its AI spending forecast for 2025 to $72 billion. Meta’s aggressive spending in AI coupled with its shift to the metaverse and improvements in operational efficiencies are some of the reasons why investors have their eyes fixed on its stocks.

“Using AI to optimize the data it has on users for revenue is a clear application, one that allows Meta to play offense while Alphabet is playing defense. While AI is expensive, there is good evidence that it is really paying off so far,” Jensen Investment Management Portfolio Manager Allen Bond said.

Bond bought Meta stocks for the first time weeks ago. His decision to invest in the company was partly influenced by the company’s aggressive investment in AI. According to Bond, Alphabet will likely lose a significant share of its search market to AI startups like ChatGPT.

Meta reported a 31% return on investment in quarter one of this year. This was more than double its earnings in 2023 when its metaverse ambitions were pushing its spending up.

Tech Market Resurgence

The surge in the company’s stock price points to growing investor confidence in Meta’s AI strategy. Analysts say that Meta’s increased spending forecast shows that the company remains committed to maintain leadership in the AI industry.

“The amount of spending might give some pause, but we’re confident Meta can use AI to drive revenue and accelerate growth. This shows Meta is committed to making the investments it needs to maintain its leadership, and while the stock has had a nice run, we’re still bullish on the long-term opportunity,” Allspring LT Large Growth ETF Manager Jake Seltz said.

Meta’s stock surge coincided with the growing preference for AI-related stocks among investors after the latest earnings season eased fears that tech giants might reduce investment in computing infrastructure. The tech stock rebound also signifies a shift from the market shakeup witnessed last year. The shakeup caused shares of tech giants like Nvidia to tumble after Chinese startup DeepSeek announced cheap AI models.

Amazon stocks have also gained 32% since April 8 after US President Donald Trump paused tariffs. The Global X AI and Tech ETF has performed better than the Nasdaq 100 and the S&P 500 over the same period.

Future Outlook

Meta leverages AI in advertising. The social media giant uses the technology for ad targeting and engagement across its range of platforms, including Whatsapp and Instagram. Recently, the company said that it will start placing ads on the Whatsapp messaging platform. Meta is reportedly working on leveraging AI technology to facilitate full ad creation automation.

New Street Research Analyst Dan Salmon estimates that Meta could grow its ad revenue by between 1% and 2% annually over the next few years by integrating AI creative tools. This could grow to 4% by the year 2030.

Close to 90% of Wall Street analysts recommend investing in Meta stocks. But even as the market remains optimistic about the company, Meta stocks are still trading slightly above their average target price, which points to limited additional gains for investors.

“It is still in the buy range, since you’re getting pretty strong growth for a pretty reasonable price. Still, rallies like this don’t continue forever, and it certainly isn’t the screaming buy it was not too long ago,” Carnegie Investment Counsel Research Director Greg Halter said.