Meta Soars on AI Hype: Can This $771 Rally Sustain?

Summary
• Meta (META) surges 2.84% to $771.29, breaking intraday highs of $774.46
• AI-driven ad revenue hits $46.6B in Q2, beating expectations by 38%
• Options frenzy: 137k contracts traded, with 775C strike seeing 178k turnover
• Sector leader Microsoft (MSFT) also up 2.2%, signaling tech AI momentum

Meta's explosive move comes amid aggressive AI capital spending and record ad revenue growth. With 3.48B daily active users and $66-72B 2025 capex plans, the stock is riding a wave of AI optimism. Technicals show bullish momentum across all timeframes, while options activity reveals heavy call buying at key resistance levels.

AI Infrastructure Spending Fuels Earnings Optimism
Meta's 2.84% surge stems from its $66-72B 2025 AI capital expenditure plan, a $30B increase from 2024. This aggressive spending is already yielding results: Q2 ad revenue rose 22% to $46.6B, driven by AI-powered recommendation systems boosting engagement by 20%+ across platforms. The stock is reacting to both near-term earnings strength and long-term AI growth potential, with Wall Street analysts raising price targets to $1,086 ($41.5% upside) as AI monetization accelerates.

Application Software Sector Rally Led by AI Pioneers
The Application Software sector is seeing broad-based strength, with Microsoft (MSFT) up 2.2% as AI infrastructure spending gains momentum. Meta's 2.84% move outperforms sector averages, reflecting its unique position in consumer AI adoption. While Microsoft benefits from enterprise AI demand, Meta's user base of 3.48B DAUs provides a massive, real-time testing ground for AI monetization strategies, creating a dual-layer growth narrative that justifies its premium valuation.

Options Playbook: Gamma-Driven Call Strategy with 775C-780C
• 200-day MA: 629.11 (well below) • RSI: 58.06 (neutral) • MACD: 9.49 (bullish) • Upper BB: 753.90 (broken) • 30D Support: 711.50–713.32 • 200D Support: 571.30–577.07

Meta's technicals show strong short-term bullish momentum with key resistance at $753.90 already breached. The stock is trading above all major moving averages with RSI in balanced territory. Options activity reveals heavy call buying at the 775C and 780C strikes, which align with Fibonacci extension levels and represent high-gamma positions for directional plays.

• META20250808C775
- Strike: $775 (1.77% OTM) • Expiry: 8/8 • IV: 26.73% • Leverage: 97.94% • Delta: 0.444 • Theta: -3.59 • Gamma: 0.01638 • Turnover: 8.77M
- IV at sector median • High leverage for small moves • Strong gamma for price acceleration
- Projected 5% upside payoff: $788.86 (19.7% gain)

• META20250808C780
- Strike: $780 (2.45% OTM) • Expiry: 8/8 • IV: 26.66% • Leverage: 130.87% • Delta: 0.364 • Theta: -3.07 • Gamma: 0.01561 • Turnover: 7.88M
- Optimal risk/reward ratio • High leverage for mid-term gains • Liquid position with 182k turnover
- Projected 5% upside payoff: $819.05 (23.1% gain)

These options offer asymmetric exposure to Meta's AI-driven momentum. The 775C provides high gamma for short-term acceleration while the 780C balances leverage with liquidity. Traders should monitor IV expansion and volume flow at these strikes as leading indicators of market conviction.

Backtest Meta Stock Performance
After a 3% intraday increase, META has historically shown positive short-to-medium-term gains. The 3-Day win rate is 52.56%, the 10-Day win rate is 59.46%, and the 30-Day win rate is 65.38%, indicating a higher probability of positive returns in the immediate aftermath of such an increase. The maximum return observed was 7.12% over 30 days, suggesting that META can continue to perform well in the days following a significant intraday surge.

AI Megatrend Play: Take Profit or Ride the Wave?
Meta's AI-driven growth trajectory shows no signs of slowing, with $46.6B Q2 ad revenue and 3.48B DAUs validating its superintelligence strategy. The 2.84% move above $750 confirms key support-turned-resistance, suggesting this could be a base-building phase for a $784.75 52W high challenge. Sector leader Microsoft's 2.2% move reinforces the AI infrastructure narrative. Investors should consider rolling 775C positions into 780C as Meta approaches $775, with tight stops below $750 to protect gains. With $66-72B in AI capex, this is more than a stock move—it's a strategic inflection point for the AI megatrend.