Meta Stock Had a Lousy First Half. Here's Why the Tech Giant's Shares Are Rising Again

Meta was the best-performing stock in the S&P 500 on Friday as investors continued to cheer the social media giant’s push to monetize its AI investments. In an internal memo, Meta (META) laid out plans to double its cloud computing capacity to 14 gigawatts next year and begin producing its own AI chips with designer Broadcom (AVGO) in September, Reuters reported on Thursday. On Thursday, Meta also released its latest AI model, Muse Spark 1.1, which developers can pay to use through a new API platform. The shares jumped nearly 5% yesterday, and the stock was up another 5% in recent trading. Friday’s gains pared Meta stock’s year-to-date losses to about 4%, since the stock came into this week down nearly 12% since the start of the year.

Meta’s taken a different approach to AI investments than its hyperscaler peers, investing huge sums to train AI models primarily for its own use. Recent developments suggest the company is pivoting to a third-party service provider model, a strategy that investors are cheering. Wall Street started to ask questions about Meta’s AI infrastructure spending this year, with some investors expressing concern the social media giant is spending hundreds of billions on data centers for its own use, unlike Alphabet (GOOG) and Amazon (AMZN), which sell computing capacity to cloud customers. Meta has been one of Big Tech’s laggards this year. It was the only Magnificent Seven stock to fall in both the first and second quarters. And its 15% first-half decline was th...