Meta Shares Face Potential Pullback After Stellar Run

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Meta's stock, having surged dramatically to approach the $700 threshold, is now exhibiting signs of exhaustion. Market strategists are pointing to technical indicators that suggest a potential consolidation phase, while institutional investors appear divided on the equity's future trajectory. At the heart of the uncertainty lies the company's multi-billion dollar commitment to artificial intelligence.

Recent portfolio adjustments by major funds reveal a lack of consensus. Swedbank AB increased its Meta holdings by 1.0% in the third quarter, maintaining a substantial position valued at approximately $2.56 billion. In contrast, IFM Investors reduced its exposure by 0.9%, though it retains a stake worth over $311 million. This split underscores the pivotal debate: whether Meta's operational performance and AI roadmap can justify its escalating capital expenditure.

The AI Spending Conundrum

Fundamentally, investor focus is fixed on Meta's aggressive investment strategy. The company's third-quarter earnings per share of $7.25 comfortably surpassed the consensus estimate of $6.74. However, management's guidance for 2025 capital expenditures landed between $70 and $72 billion, with plans for further increases in 2026.

This spending wave is creating a performance gap. While the S&P 500 index has advanced 17% year-to-date, Meta's shares have gained only 13%. The market is awaiting clear signs that returns from the AI infrastructure build-out will offset the rising depreciation and cloud computing costs. The investment community is questioning when, or if, these substantial outlays will translate into proportional profitability.

Technical Indicators Flash Caution

From a chart perspective, analysts are noting concerning patterns. A monthly "shooting star" candlestick formation has emerged—a pattern often associated with trend pauses or reversals. The upward momentum that characterized recent weeks has noticeably decelerated following the attempt to breach the $700 level.

Absent fresh catalysts from the broader technology sector, particularly from the Nasdaq 100 index, the stock could experience further near-term pressure. The bullish drive appears to be stalling for now.

Regulatory Hurdles Add to Headwinds

Beyond financial metrics, regulatory challenges persist. Italy's competition authority has instructed Meta to suspend controversial contractual clauses in its WhatsApp service. This development ensures that alongside cost concerns, regulatory risk remains a key agenda item for investors looking toward 2026.