Meta Platforms’ AI Spending Sparks Sell-Off—and Big Upside

Meta Platforms ( (META) ) has been popular among investors this week. Here is a recap of the key news on this stock.

Meta Platforms has slipped into a short-term slump, with the stock giving back all its post-earnings gains and dropping more than 9% over the past five trading sessions amid a broader sell-off in software and AI-focused names. The pullback comes as investors reassess heavy AI spending across the sector, but it has left Meta trading at a comparatively modest forward P/E of about 22.6, cheaper than many AI and software peers. Despite the volatility, Meta’s underlying business remains strong: fourth-quarter revenue jumped 24% to $59.9 billion and EPS hit $8.88, both ahead of expectations, while daily active users climbed 7% to 3.58 billion and ad impressions rose 18%. Management is guiding for roughly 30% year-over-year revenue growth next quarter, underscoring the momentum in its core advertising engine.

The main sticking point for the market is Meta Platforms’ aggressive AI investment plan, with total expenses projected to reach $162 billion to $169 billion in 2026 as it pours money into AI and infrastructure. However, Wall Street remains firmly upbeat. Rosenblatt’s Barton Crockett lifted his price target to a new Street high of $1,144, seeing more than 70% upside and arguing that Meta can finance its AI build-out while still generating strong free cash flow. Jefferies’ Brent Thill likewise points to AI-related investments already showing benefits and notes that Meta has pulled back on metaverse spending, signaling tighter cost control. The stock carries a Strong Buy consensus from 44 analysts on TipRanks, with an average price target of $859.31 implying about 30% upside, positioning the recent dip as a potential entry point for investors seeking exposure to a profitable, cash-generative AI and social media leader.

Meta Platforms also indirectly gained visibility in regulatory developments abroad. As French authorities escalated a probe into rival platform X over alleged algorithm abuse and sexually explicit AI-generated images, the Paris prosecutor’s office announced it is abandoning X in favor of Meta’s Instagram and Microsoft’s LinkedIn for official communications. While not financially material on its own, the move highlights Meta’s continuing role as a default, trusted channel for government and institutional messaging even as regulatory scrutiny of social platforms intensifies globally.