Meta's drive into AI brings to mind the dangers of excessive dark-fiber expansion seen in the 1990s
- BofA analysts warn the 2025 market risks focus on capital-intensive sectors, with Meta's $30B bond sale and $27B Blue Owl partnership exemplifying AI infrastructure bets. - Meta's Q3 revenue rose to $51.2B but net income fell 83% due to $15.9B tax charges and soaring AI costs, despite CEO Zuckerberg's long-term AI vision. - The SPV financing model used for Meta's Hyperion data center draws comparisons to 1990s dark-fiber overbuild risks, as AI spending reaches $400B industry-wide this year. - Reality Lab
According to BofA analysts, yesterday’s stock market downturn marks the conclusion of the “cutting season,” with attention now turning to possible risks in 2025, especially in industries with significant capital investments and unpredictable outcomes. One of the most closely watched companies is
Meta’s third-quarter financial results highlighted these issues: the company generated $51.2 billion in revenue, surpassing forecasts, but net profit dropped 83% year-over-year to $2.7 billion due to a one-time $15.9 billion tax expense from the U.S. “One Big Beautiful Bill Act” and surging AI-related capital spending, according to
The SPV financing model introduced by Meta’s Hyperion initiative has drawn parallels to the dark-fiber overbuild crisis of the 1990s, when excess capacity led to financial troubles, as Fortune points out. While experts such as Arthur D. Little’s Sean McDevitt believe this method enables faster scaling by tapping into outside funding, skeptics caution that there are risks if anticipated AI workloads do not materialize. Meta’s strategy reflects a wider industry movement: Alphabet, Microsoft, and Amazon are expected to collectively invest $400 billion in AI infrastructure just this year.
Outside the technology sector, other industries experienced varied developments. The Indian government approved a record Rs 37,952 crore subsidy for phosphatic and potassic fertilizers to assist farmers during the 2025-26 Rabi season, according to the
BofA’s caution points to a larger market reality. While Meta’s aggressive AI investments and use of SPVs showcase the tech sector’s drive for innovation, they also highlight the fragility of a market where immediate profits are hard to achieve. As 2025 unfolds, investors will be watching closely to see if these bold strategies deliver lasting gains or amplify existing risks.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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