Meta Platforms (NASDAQ:META) CEO Mark Zuckerberg famously declared that 2023 will be a “year of efficiency” for his company. This, however, seems to be at odds with Meta Platforms’ big (and, undoubtedly, costly) push to develop artificial intelligence (AI) technology. So, it’s fine to be bullish on META stock, but caution is advised and you might want to wait for a share-price pullback before jumping into the trade.

Meta Platforms certainly hasn’t given up on its foray into the metaverse. In a recent blog post, the company reaffirmed its belief in the potentially transformative impact of the metaverse.

Yet, if you plan to invest in Meta Platforms, be aware that it’s not only a social media platform or a metaverse-focused business. Meta Platforms is preparing to dive headfirst into the increasingly crowded field of AI, and this will certainly have major implications for Meta Platforms and its stakeholders.

Be Patient as META Stock Looks Overvalued

META stock recently zoomed to its 52-week high, but is that necessarily bullish? Strong momentum might be a good thing, but value-focused investors may have concerns about Meta Platforms.

Let’s check a few traditional valuation metrics. Meta Platforms’ GAAP trailing-12-month price-to-earnings (P/E) ratio of 30.51x is significantly higher than the sector median P/E ratio of 19.83x. Furthermore, Meta Platforms’ trailing 12-month price-to-book (P/B) and price-to-sales (P/S) ratios of 5.05x and 5.55x are much higher than the respective sector medians of 1.58x and 1.14x.

Hence, we already have a compelling argument that prospective value investors shouldn’t jump into META stock now. If the share price pulls back to $220, then Meta Platforms’ valuation should be more reasonable. So, be patient and don’t make the mistake of chasing stocks at high prices, even if you believe in Meta Platforms as a company.

Keep an Eye on Meta Platforms’ AI Outlays

As mentioned earlier, Meta Platforms isn’t only focused on social media and the metaverse. In 2023, Meta Platforms has a “plan to build the next generation” of its “infrastructure backbone — specifically built for AI.”

In a blog post, Meta Platforms declared its intention to introduce a “first generation custom silicon chip for running AI models.” Moreover, the company is working on a “new AI-optimized data center design.” Additionally, Meta Platforms is in the “second phase” of developing a “16,000 GPU supercomputer for AI research.”

It seems like every publicly listed tech company wants to be an AI innovator nowadays. Frankly, it won’t be easy for Meta Platforms to succeed in this increasingly crowded field. Certainly, Meta Platforms’ foray into AI technology will increase the company’s capital expenditures (capex).

This doesn’t seem to jive with Zuckerberg’s assertion that 2023 will be a “year of efficiency.” Meta Platforms’ capex for this year’s first quarter was $7.09 billion. Will it be much greater than that in the coming quarters?

Informed investors will want to keep an eye on Meta Platforms’ capital outlays throughout the year. Kim Hazelwood, director of AI research at Meta Platforms, admitted that “there is a little bit of tension” between Meta’s AI-focused spending and the company’s efficiency mandate. Hopefully, that “little bit of tension” won’t impact Meta Platforms’ bottom line too much this year.

Watch for a Possible Pullback in META Stock

Meta Platforms could be a winner in the AI arms race, but that remains to be seen. To achieve its AI-focused ambitions, Meta Platforms will undoubtedly have to spend a lot of capital. Thus, the company may end up sacrificing “efficiency.”

Going forward, stock traders can choose to keep a close watch on Meta Platforms’ financial outlays. Right now, there’s no need to be hasty with META stock. If it pulls back to $220, that would be a reasonable entry point for a long position. So, it’s fine to be optimistic, but investors should also maintain a healthy skepticism when it comes to Meta Platforms.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.