Meta’s latest quarterly earnings results should give investors pause, according to Morgan Stanley. Analyst Brian Nowak downgraded shares of Meta to equal weight from overweight and roughly halved his price target on the social media stock, citing higher capital expenditures and lower free cash flow from the company. “We see META’s $69bn of capex over 2 years and AI-driven data center build as a sign of structurally higher capital intensity,” Nowak wrote in a note Thursday. “While these investments could make META stronger over 5 years, we see ’23 FCF heading 60% lower and higher risk to prove ROIC and incremental growth.” The analyst slashed his price target to $105 from $205. The new target is about 19.1% below where shares closed Thursday at $129.82. Shares of Meta were down 23% in Thursday premarket trading, after the company reported disappointing third-quarter results and issued weak guidance for the fourth quarter. Meta shares have already cratered 61% this year, as the tech company deals with an ad spending slowdown, Apple’s privacy changes and greater competition from TikTok. The analyst expects the company’s troubles will continue as Meta raises investments in the short term to build out its AI capabilities, though he noted that they’re showing an “early positive signal” on improving user engagement on Reels. “Material revenue and engagement incrementality from these investments is likely to take time (well into ’23?) and is uncertain,” the note said. “And in the meantime, we see earnings power staying depressed. Consider that our ’23/’24 revenue forecast is falling 1%/1% (modestly slower organic growth and FX)…while ’23/’24 FCF is falling 59%/48%.” — CNBC’s Michael Bloom contributed to this report.