Meta Plunges 7% as Wall Street Questions Massive AI Capital Expenditures
Meta shares tumbled over 7% despite strong revenue growth as Wall Street questions massive AI spending. Major tech firms shed $1.36 trillion in weeks.
Meta shares plunged by over 7% on Thursday, wiping out approximately $125 billion in market capitalization in a single session despite reporting a 26% revenue growth in its latest financial results.
Tech Giants Under Pressure Over AI Spending
Alongside Meta, Google parent company Alphabet, Nvidia, and SpaceX experienced sharp declines, while Apple, Walmart, and Eli Lilly strengthened. Investors are increasingly questioning whether tech giants can justify their massive capital investments in artificial intelligence.
After a prolonged period where announcements of heavy infrastructure spending on AI were met with enthusiasm, the market has grown skeptical regarding colossal expenses with unclear returns. Meta, the parent company of Facebook, Instagram, and WhatsApp, is now trading below its end-2025 level, erasing all gains accumulated since the beginning of the year.
Trillions Wiped Out Across Markets
Meta reported third-quarter revenue of $64.6 billion, marking a 26% year-over-year increase that beat analyst expectations. However, investors fixated on soaring expenditure forecasts, with Meta raising its total cost outlook and updating its planned capital expenditure range to $135–145 billion.
Wall Street's message to big tech is sharpening: revenue growth alone is no longer enough to justify hundreds of billions in capital expenditures.
According to Yahoo Finance data, major tech firms experienced severe market value erasures since October 6. Nvidia shed about $623 billion in market cap, SpaceX lost roughly $286 billion, Alphabet dropped by $243 billion, and Meta lost about $207 billion. In total, these four companies wiped out roughly $1.36 trillion in valuation over a span of slightly more than two weeks.
Conversely, companies less tied to the frantic AI infrastructure race saw opposite trends. Apple added approximately $163 billion to its market value, pharmaceutical giant Eli Lilly gained $150 billion, and retail titan Walmart expanded by $100 billion. This stark divergence highlights shifting investor preferences as Wall Street demands tangible profit conversion from artificial intelligence investments.
