Meta's AI spending is 'working,' Jefferies' Thill explains

Meta Platforms (META) exceeded Wall Street's third quarter earnings expectations, delivering strong results on both revenue and profit. Yet the stock has slipped as analysts grow concerned over whether Big Tech could have a new CapEx spending problem around AI. The tech giant reported revenue of $50.59 billion, surpassing the estimated $40.26 billion, while adjusted earnings per share (EPS) reached $6.03, beating analyst expectations of $5.52. Jefferies Senior Analyst Brent Thill joins Market Domination to provide insight into the results, noting that current tech sector pressure stems from broader market uncertainties rather than company performance. "What we're seeing on our desk is not necessarily fear of Microsoft (MSFT) or Meta (META) massive miss but more a broader issue that's going on," Thill explains, highlighting upcoming events like next week's election and the Federal Reserve's November meeting as key concerns. Thill identifies AI capital expenditure as a "central focus" of the report. He points to favorable booking numbers compared to capital expenditure across Big Tech, explaining that "that means more business is coming in than their spending." While this allows companies to measure real revenue, he notes it's still "early in the innings." Roth Capital Partners managing director and senior research analyst Rohit Kulkarni told Yahoo Finance earlier today that this is a buy the dip opportunity for tech investors eyeing Meta stock. Regarding Meta specifically, Thill emphasizes AI's role in enhancing user experience by "helping us as consumers find appropriate content, understand what's relevant," and personalizing commerce suggestions across Meta's platforms. "I think the spending is working and I understand the fear," he tells Yahoo Finance.
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