Meta Platforms Inc. (NASDAQ: META) saw its first decline in over a month on Tuesday, ending a 20-session winning streak that had propelled the stock up by 20.5%. This dip raises questions about the sustainability of its recent rally, which has been fueled by strong fourth-quarter earnings, AI advancements, and renewed investor confidence in big tech.
Despite the pullback, analysts remain optimistic about Meta’s long-term trajectory, citing its aggressive investments in artificial intelligence and growing dominance in the digital advertising space. However, with technical indicators signaling potential weakness, investors should closely monitor key support levels and market trends.
Meta’s Stock Movement: A Closer Look
On Tuesday, Meta shares dropped nearly 3%, marking the first significant decline since January 17. The stock’s rally coincided with several key market events, including President Donald Trump’s inauguration and rising optimism around AI-powered advertising tools.
Meta’s stock has been among the best-performing of the so-called “Magnificent Seven” tech stocks in 2025, outperforming peers like Apple, Microsoft, and Alphabet. The surge was largely driven by investor enthusiasm for AI integration into Meta’s advertising business, which has improved ad targeting and engagement across its platforms, including Facebook, Instagram, and WhatsApp.
However, Tuesday’s drop suggests that the stock may be facing resistance at higher levels, as it struggled to break out of its current upward channel.
Technical Analysis: Key Price Levels to Watch
Meta’s stock has been trading within a well-defined ascending channel since July 2024. This channel represents an orderly and controlled uptrend, but Tuesday’s decline could indicate a potential consolidation phase.
1. Ascending Channel Resistance
Meta recently tested the upper trendline of its ascending channel but failed to make a decisive breakout. This rejection at the resistance level suggests that buying momentum may be weakening in the short term.
2. Relative Strength Index (RSI) Weakness
Another technical red flag is the drop in Meta’s Relative Strength Index (RSI). On Tuesday, the RSI fell below the overbought threshold for the first time in weeks, signaling a potential shift in momentum. A declining RSI could indicate that selling pressure is increasing, potentially leading to further downside.
3. Key Support Levels to Watch
If Meta’s stock continues to pull back, investors should watch three critical support levels:
- $680: This level is a key near-term support, derived from previous consolidation patterns between October and November. If the stock holds above this level, it may indicate that the uptrend remains intact.
- $632: If the stock falls below $680, the next major support level is around $632. This area corresponds with prior peaks seen in mid-December and early January, which could act as a floor for further declines.
- $600: A deeper correction could bring Meta down to $600, a psychological and technical support level. A breakdown below this point would suggest a more extended pullback and a potential change in the stock’s longer-term trend.
Long-Term Outlook: Is Meta Still a Buy?
Despite the recent dip, many analysts remain bullish on Meta’s long-term prospects. Here are some key factors driving optimism:
1. AI-Powered Advertising Growth
Meta’s substantial investments in artificial intelligence have transformed its advertising business. AI-driven ad targeting and content recommendations have significantly improved engagement, leading to higher ad revenue. Analysts believe that AI could continue to drive Meta’s earnings growth in the coming years.
2. Strong Financial Performance
Meta’s Q4 2024 earnings report exceeded expectations, showcasing strong revenue growth and cost management. The company reported a 22% year-over-year increase in ad revenue, reflecting its ability to monetize user engagement effectively.
3. Expanding AI and Metaverse Initiatives
Beyond advertising, Meta is investing heavily in AI-powered products and metaverse technologies. The launch of AI-driven chatbots and augmented reality experiences on its platforms has positioned the company as a leader in next-generation digital experiences.
Potential Risks for Meta Investors
While Meta’s long-term outlook remains positive, investors should also be aware of potential risks:
- Regulatory Scrutiny: Meta continues to face antitrust investigations and regulatory challenges in the U.S. and Europe. Any major legal actions could impact its business operations and stock performance.
- Tech Sector Volatility: The broader tech sector remains sensitive to interest rate fluctuations and macroeconomic conditions. Any shift in Federal Reserve policy or economic downturn could pressure high-growth stocks like Meta.
- AI Competition: While Meta is a leader in AI-driven advertising, it faces stiff competition from other tech giants like Google and Microsoft, which are also investing heavily in AI technologies.
Conclusion: What’s Next for Meta?
Meta’s first stock decline in over a month may signal the start of a short-term consolidation phase, but the company’s long-term growth prospects remain strong. Investors should closely watch key support levels at $680, $632, and $600 to assess whether the stock will stabilize or face further declines.
With continued advancements in AI, strong financial performance, and dominance in digital advertising, Meta remains a compelling investment for those with a long-term outlook. However, short-term traders should be mindful of technical resistance and broader market conditions before making any moves.
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