Meta (META) Slid Despite Reporting Strong Earnings

Market Overview - The US equity market ended Q4 2025 positively, with the S&P 500 increasing by 2.7%, reflecting strong upward momentum [1] - Investor optimism was bolstered by better-than-expected corporate earnings, the US Federal Reserve's easing stance on interest rates, and a resilient macroeconomic environment [1] - Clarity on trade policy also contributed to market support, although there was increasing divergence beneath the surface of the Index [1] Investment Trends - AI continues to be a significant market driver, though it faces scrutiny regarding funding, limitations, and potential returns on investment [1] - There are observable secular trends that present attractive investment opportunities, particularly in AI infrastructure, supported by rising business spending and tax incentives from the One Big Beautiful Bill [1] Fund Performance - Class A shares of the Alger Spectra Fund underperformed the Russell 3000 Growth Index in Q4 2025 [1] - The Information Technology and Utilities sectors contributed positively to the Fund's performance, while the Health Care and Communication Services sectors detracted from it [1] Meta Platforms, Inc. Analysis - Meta Platforms, Inc. (NASDAQ:META) was identified as a leading detractor to the Fund's performance, with a one-month return of -6.24% and a 52-week gain of 1.22% [2] - The company's market capitalization stands at $1.56 trillion [2] - Concerns arose regarding management's guidance for significantly higher operating expenses and capital expenditures (CapEx) related to AI infrastructure investments, which pressured forward earnings and free cash flow expectations [3] - Despite strong underlying results and continued advertising momentum, investors are worried about the scale and timing of AI-related CapEx, with 2026 CapEx expected to be "notably" higher than in 2025 [3]