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CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Meta goes big on AI despite Metaverse losses

​​Social media giant Meta is spending big on AI even as it metaverse division continues to struggle, but the vital role of ad revenue remains.

Wall Street Source: Getty Images

​​​Zuckerberg pushes on AI

Meta stock had a roller coaster start to 2024, first regaining a $1 trillion market cap before tumbling after the first quarter (Q1) earnings. The big sell-off came as CEO Mark Zuckerberg pledged significant spending increases over the coming years to develop "the world's leading AI assistant." Meta launched major updates to its AI chatbot in April, integrating it across Facebook, Instagram and other apps as it tries to challenge OpenAI's viral ChatGPT release.

​Metaverse investment continues

​While aggressively pursuing AI, Meta remains heavily invested in building the metaverse virtual reality world. However, its Reality Labs metaverse division continues to lose billions, posting a $3.85 billion operating loss in Q1 alone. Analysts project around $19 billion in losses for Reality Labs in 2024. Meta did gain market share in VR headset sales with the launch of its Quest 3 device, though it now faces new competition from Apple's Vision Pro headset.

​Advertising dominates revenues

​Despite the AI and metaverse pushes, social media advertising remains the cash cow for Meta, accounting for 98% of revenue. The company dominates digital ad sales along with Google and Amazon. Removal of a key competitor like TikTok could further benefit Meta by reducing competition for user attention and ad spending.

​Analyst outlook

​Most Wall Street analysts remain bullish on Meta stock for 2024. They project the Facebook parent will see revenue growth approaching 18% and earnings growth of 34% as its AI and advertising businesses advance. The AI investments are seen as critical for Meta's future, even with the near-term higher spending weighing on profits. 

​How to trade the Meta share price?

​LSEG Data & Analytics data shows a consensus analyst rating of ‘buy’ for Meta – 21 strong buy, 34 buy, 6 hold and 2 sell.

Meta analysts ​Source: LSEG Data & Analytics
Meta analysts ​Source: LSEG Data & Analytics

​Meta share price – technical view

​Meta’s share price, which has risen by 38% year-to-date, continues to grind higher from its late-April post-earnings low at $414.50, and has been trying to fill its price gap with the 24 April low at $484.58 but so far to no avail.

​Meta Daily Candlestick Chart

Meta daily chart ​Source: TradingView
Meta daily chart ​Source: TradingView

​A rise above the 24 April high at $510.00 is needed for the Meta share prices’ all-time high at $531.49 to be back at the forefront.

​A drop below last week’s low at $454.46 would lead to a less favourable technical outlook, though, with the April trough, the November 2022 to June 2024 uptrend line and the 200-day simple moving average (SMA) at $431.96 to $392.65 being back in sight.

​Meta Weekly Candlestick Chart

Meta weekly chart ​Source: TradingView
Meta weekly chart ​Source: TradingView

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CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

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