Meta’s stock has demonstrated an impressive resilience to the ripple effect of the release of the Chinese AI model, DeepSeek, which upset the order in the AI industry and knocked back the momentum of the big tech stock markets that have dominated the sector.
The success of the DeepSeek R1 model caused sharp declines in market value and panic sell-off among investors.
Nvidia took the biggest hit, suffering losses that went as high as $600 billion in a single trading day. The model developed at a fraction of the cost of some of the advanced Western counterparts proved to be a disruptive force in the sector, shooting to the top of the US Apple App Store, surpassing established alternatives like ChatGPT.
Meta’s stocks continue to ride the AI wave
However, Meta Platforms Inc. went against the downward trend, setting off on a 10-day streak of making gains on the charts. Its stock rose 2.6% on Friday and gained over 16% in the past 10 days, rising from about $617 to $700 per share.
The ten-day streak is Meta’s longest rally since September 2015, reflecting investors’ confidence in the company’s AI strategy. Analysts say AI is the future of advertising, helping companies directly target their audience.
Meta’s strategy of using AI to improve ad targeting, which is its major revenue driver for the company, has been the motor for its 10-day value surge.
Other tech companies have not seen any level of success comparable to Meta’s since DeepSeek came on the scene. Nvidia, a leading AI chipmaker, suffered a historic loss of about $600 billion after prospering primarily due to the AI boom. Similarly, Microsoft lost about 6% in stock value as investors related concerns that DeepSeek’s cost-effectiveness could lead to less demand for high-end hardware and premium subscriptions for AI-related products.
Targeted advertising could be the future of AI
Meta Platforms’ 10-day streak of stock gains started on January 15, 2025, defying the AI stock capitulation catalyzed by DeepSeek. The company attributes the rally to its unwavering commitment to the development of its AI products.
DeepSeek’s model is a competitor for Meta’s Llama AI model. However, Zuckerberg emphasizes that the competition won’t stop the company’s investment in AI infrastructure. The company recently announced a $65 billion budget for the development of AI-related projects and infrastructure in 2025.
Meta’s CFO, Susan Li says the company was immune to DeepSeek’s impact because it doesn’t rely on selling its AI model for revenue. A bulk of Meta’s income comes from ads, and the company plans to use AI to improve ad targeting and boost engagement on the platform. Investors are also positive that AI will help the company be more profitable by deploying more targeted ads.
Robert Pavlik, senior portfolio manager at Dakota Wealth Management, said, “Meta has shown a lot of great execution, and there’s a lot of optimism about how much AI can help the company.” He says the future of advertising depends on the ability to target the audience directly, and there are potential upsides for Meta’s shares as more people look to AI for advertising solutions.
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