Jo Bhakdi
Investor, Tesla & AI Stocks
Meta's AI infrastructure financing raises the risk that a long wait for revenue and profit will keep its shares volatile. It disclosed plans to raise up to $95 billion. @amitisinvesting warns that further dilution could keep the stock stuck even if the buildout eventually pays off. Meta's selloff is still a massive buying opportunity. x.com x.com x.comÂ
Semiconductor fundamentals have improved as SpaceX and Meta say spending will rise further, while rates have come down. Earlier caution rested on fears that megacaps could not sustain spending and rising rates would slow AI investment; neither worry has played out. Today's selling feels more like stops being hit and investors giving up. x.com x.comÂ
Meta's planned stock offerings to finance AI growth merit a selloff in its shares. The Wall Street Journal reports up to $95 billion in financing and a potential at-the-market offering of up to $60 billion, possibly beginning in Q1 2027. Send Meta to zero. x.comÂ
Meta's valuation is compelling again because its operating-cash-flow multiple has fallen while revenue growth accelerated over the past year. It trades at 12x operating cash flow, close to 10x 2027 operating cash flow. Its unique position should make it one of the AI era's biggest winners, with Muse becoming its best asset in the long run. The equity raise's timing was unwelcome, but that is now behind it. x.comÂ
Meta's voluntary move is bullish because it expects to profit from it. Its massive debt capacity remains untouched and is increasing. x.comÂ
Meta looks unattractive because its fines, capital raises and AI capex make the math ugly. The stock could trade back to the $500s, while hyperscalers probably have to make those raises with equity down 15-25%. Muse looks like a fad and average users may not need AI agents, matching LogicalThesis's view. x.com x.com x.comÂ
Meta's earnings beat removes the immediate earnings risk from its bullish setup, with the 688 area holding on a closing basis. Q3 revenue was $64.6 billion, up 26%, and EPS of $3.83 beat estimates; Q4 revenue guidance is $73-76 billion. Wave 4 may have ended near 681; a close above the 9- and 21-day averages near 715 would confirm that count, with 755, 773 and 796 as targets. x.comÂ
Meta's 2022 deceleration was a small price for the years of reacceleration that followed as its business improved. The stock was punished over a 'decelerating core business,' yet trailing revenue and operating cash flow subsequently climbed. x.com x.comÂ
Meta's next-year earnings consensus of $34 a share makes a 30x forward multiple too optimistic unless it delivers a major surprise. The proliferation of $1,000 price targets also looks like a warning to get out. x.com x.comÂ
Meta's better-than-expected revenue is why it should return to its roughly $800 all-time high. Revenue rose 26.1% year over year to $64.60 billion, above the $63.37 billion analyst estimate; quarterly EPS was $3.83 and net income was $9.86 billion. x.com x.comÂ