By Doug Busch and Adam Levine
Meta Platforms is spending around $70 billion on AI data centers in 2025, a figure that is set to rise next year. Unlike the other big AI spenders, Meta has no cloud that rents out AI servers; this is all for its own use. Recent actions by CEO Mark Zuckerberg suggest all this computing capacity hasn't been put to good enough use.
Meta embarked on an AI hiring spree in June and established a new AI lab under Alexandr Wang. In October, it laid off 600 workers from its AI units. Last month Yann LeCun, its chief AI scientist, announced his departure. There have been a slew of anonymously-sourced stories about the inner workings of the new AI lab, and today, two new stories hinted at upheaval and friction. If these sources are coming from inside Meta, it is a sign of ruffled feathers both inside and outside the new lab.
Unsurprisingly, the stock is having a rough go of it. Over the last three months Meta has declined by 13%, diverging from the Invesco QQQ Trust benchmark's 7% gain.
Relative weakness of that type is telling. From a technical perspective, Meta is stuck in no man's land. Bulls will argue that a bullish island reversal was completed on Dec. 4, with stock now filling in that gap and finding support at the 21-day exponential moving average. Bears will point to how the long term secular 200-day simple moving average is now sloping lower and providing resistance. Note also the bear flag on the ratio chart. Until the $680 level is pierced to the upside, investors should remain cautious.
Investors weary of Meta's turmoil but still keen on tech stocks might consider two alternatives with far more bullish technical indicators.
CoreWeave, an AI cloud infrastructure company, has encountered some serious selling pressure and is down more than 50% from its most recent 52-week high. This stock was fortunate enough to come public very close to the overall market bottom in early April. It advanced eight of nine weeks between mid-June and mid-August, sprinting from the low $30s to a high of $187. Following a doji candle the week ending June 13, a precipitous drawdown occurred and the stock dropped as low as $65.
Technicians like to mention how there is no need to catch a falling knife until a catalyst presents itself. Another doji candle, indicating a change in the prevailing trend, provided that in late November. That is a solid low to play against and remain bullish above $80. A double bottom is taking shape with a pivot just above $150, corresponding to gains of about 72% from current prices, that can be reached by mid 2026.
Coreweave was trading around $87 Wednesday.
Unity Software is just 1% off its most recent 52-week high as the iShares Expanded Tech-Software Sector ETF sits 7% off its own annual peak. That solid relative strength can also be seen on the ratio chart below as the stock has been outshining peers all year. Investors want to seek out 'best in breed' names for their portfolios -- think all-stars versus triple AAA baseball players. This stock fits the bill, as it has rallied by 122% year to date and just broke above a cup base pivot of $47.04 on Dec. 8. Unity can hit $60 by early 2026, which would represent a gain of 20% from current prices. Remain bullish above $44.
Unity Software was trading around $50 Wednesday.
Doug Busch is the senior technical analyst at Barron's Investor Circle . His technical view is added to stock picks, including those published exclusively for Investor Circle readers. A glossary of technical terms is updated regularly with new entries.
Write to Adam Levine at adam.levine@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
December 10, 2025 12:53 ET (17:53 GMT)
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