Meta Stock Surges as Morgan Stanley Defends AI Spending

Meta Platforms' stock saw a 6.6% surge on Monday, rebounding from last week's disappointing earnings report.

The jump came after Morgan Stanley analysts reassured investors that Meta's spending on AI infrastructure is justified by the company's peers, who are also investing heavily in this area.

Morgan Stanley pointed out that Alphabet, Amazon, and Microsoft are all allocating substantial sums to AI investment, with total cloud capital expenditure potentially exceeding $1.2 trillion by 2027.

The analysts noted that while Meta's spending is significant, the company has generated a substantial $41 billion in positive free cash flow over the past year. However, they also warned that most analysts expect Meta's free cash flow to turn negative by the end of this year and remain so through 2027.