Meta Platforms (NASDAQ:META) shares took a heavy hit today, tumbling nearly 8% after a courtroom setback forced investors to reassess the risks surrounding the business. A U.S. jury found the company liable in a closely watched social media addiction case, raising concerns that this may not be an isolated incident but rather the beginning of a broader wave of legal challenges.
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The ruling itself may carry limited immediate financial penalties, but the implications stretch much further. Investors are now grappling with the possibility that similar lawsuits could follow, potentially reshaping how social media platforms operate and exposing Meta to prolonged legal uncertainty.
This pullback also comes at a time when Meta has already been underperforming the broader market, with sentiment weighed down by concerns tied to its aggressive push into AI. The company has been committing enormous sums toward building out its AI infrastructure, including data centers and custom chips, a strategy that could take years to generate meaningful returns while putting pressure on the social media giant’s free cash flow.
However, for Tigress Financial analyst Ivan Feinseth, the massive outlay will be worth it eventually.
“Although NOPAT (net operating profit after tax), Return on Capital, and Economic Profit declined over the past year due to heavy AI/data center investment and a large non-cash deferred tax charge under the One Big Beautiful Bill, we expect a sharp reacceleration as AI-driven ad growth, operating leverage on past capex, normalization of the effective tax rate, and the scaling of higher-margin businesses (Reels, business messaging, commerce, subscriptions) drive NOPAT growth well ahead of the capital base,” the 5-star analyst said.
Feinseth’s thesis rests on three forces that are beginning to work in tandem: AI-enhanced advertising performance and user engagement, a widening set of monetization opportunities across its Family of Apps, and longer-term but increasingly tangible potential in Reality Labs and social commerce.
The company is leveraging advanced AI-driven ranking and recommendation systems such as GEM, Lattice, and Advantage+ to improve ad targeting, conversion rates, and “cost per result,” which in turn boosts advertiser returns, encourages higher spending, and helps maintain pricing strength. At the same time, AI-powered content discovery is increasing time spent on Facebook and Instagram while driving deeper engagement with Reels.
Across its Family of Apps, Meta is boosting monetization beyond traditional feed and Stories placements by scaling “high-growth, high-intent surfaces” like Reels, business messaging, and shopping. In parallel, short-form video continues to capture a larger share of user attention, supported by AI-powered creation tools such as the Edits app and other generative features. As the monetization gap between Reels and Feed or Stories continues to close, Feinseth thinks this shift toward video is becoming a “durable, multi-year ARPU driver.”
Meanwhile, business messaging on WhatsApp, particularly paid messaging and click-to-message offerings, is expanding at a rate well above 50% off a relatively small base, with significant headroom as both small and medium-sized businesses and larger enterprises increasingly adopt conversational channels for marketing, customer support, and transactions. Additional revenue streams within the Family of Apps, including Meta Verified and commerce-related tools, are also gaining traction, helping diversify the business beyond traditional ad impressions.
With all that taking place, Feinseth believes “significant upside exists in the shares.” Accordingly, Feinseth assigns Meta shares a Buy rating along with a $945 price target. Should the figure be met, investors will be pocketing returns of ~73% a year from now. (To watch Feinseth’s track record, click here)
39 other analysts join Feinseth in the bull camp, while an additional 5 Holds can’t detract from a Strong Buy consensus rating. Going by the $865.58 average price target, a year from now, shares will be changing hands for a 58% premium. (See Meta stock forecast)
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.