Analyst Explains Why She Trimmed Her Meta Platforms (META) Stake – ‘It’s Prudent’

We recently published Top 10 Trending Stocks and ETFs as Analyst Predicts $9 Trillion Productivity Gains Due to AI. Meta Platforms Inc (NASDAQ:META) is one of the top trending stocks.

Karen Firestone, the Co-founder and Chair Emerita of Aureus Asset Management, said in a recent program on CNBC that she trimmed Meta Platforms. Here is why:

“Most of the reason that we trim them is because they were so large as positions in our portfolios. So these are stocks that we’ve been overweight for years and that overweight has expanded and expanded, and when you’re running a portfolio that’s diversified and you have positions that are close to 10%, I mean they weren’t at 10% but you know, you’re getting it to the 8 and a half, 9%. It’s prudent to just reduce that when we look at just what’s happened with the market and also earnings growth is likely to slow somewhat. Still going to be decent, but we’ve had such enormous gains in earnings over the last few quarters,” Firestone said.

With daily active users of about 3.48 billion, Meta’s huge edge in the AI race is the data and user base it has access to, which is extremely useful for ads targeting and monetization.

In 2024, digital advertising accounted for about 98% of the company’s total revenue. The business is thriving for now. In the June quarter, price per ad rose 9% year over year, reflecting higher returns for advertisers and a favorable supply and demand balance for Meta.

However, an overall slowdown in digital advertising and huge spending from the company could limit the stock’s upside. Between 2014 and 2019, digital advertising rose about 20% annually, but growth is now expected to slow to 9% per year from 2025 through 2030.

Meta is expected to spend about $60 billion to $65 billion in 2025 on capital expenditures to expand its artificial intelligence infrastructure. Unlike hardware chip makers like Nvidia, companies like Meta would need to show actual results from their AI spending to unlock more shareholder value in the short term.

Photo by Timothy Hales Bennett on Unsplash

Macquarie Large Cap Growth Fund stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its third quarter 2025 investor letter:

“Contributing to relative performance were stocks in which the Fund holds an underweight position or no shares at all. Meta Platforms, Inc. (NASDAQ:META), parent company of Facebook, is a new but still underweight position in the portfolio. We recognize the company has quality characteristics – like its large user base and technology advantages – plus, not owning it presents risk management challenges relative to the benchmark given its significant benchmark weight. Nevertheless, we believe Meta still has valuation and quality hurdles to clear before becoming a full position, particularly providing more clarity on its use of capital.”

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Disclosure: None. This article is originally published at Insider Monkey.