Meta stock plunges more than 10% as analysts cut price targets on sky-high AI spending

Core Viewpoint - Meta's stock experienced a significant decline of over 11% following the announcement of increased AI spending for the remainder of 2023 and into 2026, raising concerns among analysts and investors about potential overcapacity and financial implications [1][4]. Financial Performance - Meta reported an annual run rate of $60 billion for its AI-powered ad tools, indicating that the investment in AI is yielding some positive results [8]. - The company also disclosed a $4 billion loss related to its Reality Labs segment, contributing to the overall negative sentiment surrounding its financial health [8]. Analyst Reactions - Following the earnings report, several analysts reduced their price targets for Meta's stock, with BofA Global Research lowering its target from $900 to $810 while maintaining a Buy rating [5]. - KeyBanc Capital Markets and TD Cowen also adjusted their price targets downward, with KeyBanc reducing it from $905 to $875 and TD Cowen from $875 to $810, both retaining positive ratings [6]. - Some analysts, such as HSBC's Nicolas Cote-Colisson and Wedbush's Scott Devitt, chose to keep their price targets unchanged at $905, indicating a more optimistic outlook [7]. Strategic Insights - CEO Mark Zuckerberg emphasized the need for increased infrastructure to meet growing demand for AI capabilities, acknowledging the risk of overshooting capacity but suggesting that any excess could be utilized in the future [2][3]. - The company is facing external requests for API services and additional computing resources, highlighting the demand for its technological capabilities [3].