Equities Update: Meta, WHSmith, Wizz, BT Fibre, Shell..

Could DeepSeek spark an AI spending rethink for Meta?

Sam North, analyst at investment platform eToro, says: “Social media giant Meta is facing steep expectations as it prepares to report its fourth-quarter and full-year results on Wednesday night. Shares in the Facebook and Instagram parent company have climbed an impressive 45% in the last six months, with much of the positive sentiment driven by Meta’s heavy investment in AI – although the emergence of China’s DeepSeek may be changing the playing field.

“After Meta’s belt-tightening phase in 2023, this earnings report should cap what has been a markedly different picture in 2024, with significant growth in headcount, revenue, as well as costs. Investors will be keeping a close eye on those costs, as well as the company’s capital expenditures. It’s this last area that may be most affected by DeepSeek’s new AI model. Meta’s previous guidance pointed to ‘significant acceleration in infrastructure expense growth’ for 2025, but – if reports are to be believed – the new open-source DeepSeek reasoning model costs significantly less to train than leading US-developed AI models, while being, in some ways, more effective.

“We saw shockwaves reverberate through the tech industry on Monday. Now, with a few days to digest DeepSeek’s announcement, it will be fascinating to discover how much credence Mark Zuckerberg gives to this potential avenue for lower-cost LLMs, especially with the waters muddied by today’s claims from OpenAI that their data may have been used without authorisation to train DeepSeek’s models. Meta’s plans to roll out smaller versions of Llama 4 in the near future are unlikely to be derailed by DeepSeek’s R1, but investors will look for whether there are any changes in the longer-term roadmap for Meta’s CapEx plans as a consequence.”

End of an era? WHSmith shifts focus to travel as high street declines

Mark Crouch, market analyst at investment platform eToro, says: “WH Smith’s latest trading update paints a familiar picture for investors. The retailer’s travel business reported growth across all travel divisions, while Smith’s high street stores are struggling to keep pace. With many of us popping into Smith’s for anything from a sandwich to suntan lotion on our travels, it’s once again the high street stores that customers are turning away from. The accelerating dominance of online retailers has forced high street shops to adapt or face extinction, something that WHSmith arguably saw this coming, having invested heavily in its travel division in recent years, with resounding success.

“While news of the potential sale of its high street business may not have come as a surprise to investors, it would mark the end of an era, as WHSmith’s joins the growing list of big retail names leaving the UK high street. However, given that the travel stores currently represent three-quarters of WHSmith’s revenue and are growing rapidly, investors are likely to feel more confident about the future of the company in this sector. For WHSmith’s high street presence, however, the writing seems to be on the wall.”

BT fibre growth offsets sluggish phone market

Adam Vettese, market analyst at investment platform eToro, says: “Diversified revenue streams have kept BT steady after strong demand for its fibre offering, offsetting weak performance abroad and in the mobile space.

“Despite a wave of cost-cutting measures and effectively an improvement on the bottom line, shares are down this morning with investors perhaps more concerned with overall revenue slipping which could have raised concerns about the capacity for growth going forward.

“Shares have been on a charge over the last year up the best part of 40%. We could now be seeing some profit taking come into play if investors feel some of the momentum is dissipating. That being said the price is still a further 40% away from where it traded in 2022.”