A Second-Chance Opportunity: 1 Reduced 17% to Purchase Now: Artificial Intelligence (AI) Growth Stock
The recent price decline presents a unique chance for investors to increase their holdings in this rapidly rising stock.
Stock in a great company is usually worthwhile to purchase when it trades at a fair price. Even if the stock has increased dramatically over the last several months, it rarely makes sense to hold out for a better deal.
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Occasionally, though, you may strike it lucky and the market may discount an excellent stock because of short-term worries. In the meanwhile, the company's future appears bright. Since those second chances are infrequent, you should seize them when you come across them.
With Meta Platforms (META 0.43%), the market seems to be offering investors a fantastic second opportunity right now. Analysts were put off by the company's intentions to raise expenditure, especially in light of its potential in artificial intelligence (AI), even in spite of the company's impressive first-quarter profitability. After a sharp sell-off following earnings, shares are today trading 17% below where they were just two weeks ago.
Here's why investors should take the opportunity to buy shares now.
Why the market punished Meta stock
The first-quarter earnings numbers for Meta exceeded expectations. Growing ad pricing and impressions drove strong revenue growth and positive results for the bottom line.
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The company's outlook for the second quarter and the entire year was where things started to change. Analyst expectations were not met by Meta's sales estimate at the halfway mark for the second quarter.
However, analysts expressed a more serious concern about the proposed increase in spending. The lower end of Meta's projection was previously $94 billion, but the company now projects total expenses of between $96 billion and $99 billion. The range of capital expenditures has been increased from the previous guidance of between $30 billion and $37 billion to $35 billion to $40 billion.
Meta is raising its expenditures for a very obvious reason. It regards artificial intelligence as having a huge potential. But in order to benefit from it, it must invest a lot of money.
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Meta has no problem investing a lot of money to develop goods and services that it thinks have a great chance of becoming used by 1 billion people and bringing in a sizable sum of money at some point in the far future. In his prepared remarks following the results announcement, CEO Mark Zuckerberg brought this to attention, saying, "We've historically seen a lot of volatility in our stock during this phase of our product playbook -- where we're investing in scaling a new product but aren't yet monetizing it."
Indeed, after Meta announced investments in its mobile feed, Stories, Reels, and other areas, the market penalized the company's shares. However, as the stock hit a new all-time high earlier this month, investors who stayed with Meta were richly rewarded. Following the recent decline in shares, investors now have a fresh chance to begin or increase their positions.
