Meta’s (META) AI Push Mirrors Metaverse Risks, Says Oppenheimer

Meta Platforms, Inc. (NASDAQ:META) is one of the AI Stocks on the Market’s Radar. On October 30, Oppenheimer downgraded the stock to “Perform” from Outperform without a price target.

The firm said that there’s “too much uncertainty” surround the company’s AI investments following Q3 earnings.

“Downgrading META to Perform (from Outperform) as risk/reward properly reflected after-hours.”

According to Analyst Jason, Meta’s “significant investment in Superintelligence despite unknown revenue opportunity mirrors 2021/2022 Metaverse spending,” where high-cost projects offered limited near-term returns.

A person with stock market data on a laptop. Photo by Anna Nekrashevich on Pexels

The firm believes investors will struggle to rationalize the stock’s price-to-earnings multiple until there is visibility into 2027.  This is because Meta’s “aggressive” revenue growth is offset by high spending.

Drawing comparisons to Alphabet, the firm noted how “GOOG [has] predictable earnings at a reasonable PE.” It further noted “both companies [are] trading at the same PE (21x 2027E), and Search could outgrow META at some point in 2026.”

Meta Platforms has been expanding its advertising capabilities and also invests heavily in artificial intelligence and the metaverse.

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Disclosure: None.