Meta Platforms Stock Sinks as AI Bets Meet Legal Storm

Meta Platforms ( (META) ) has fallen by -12.97%. Read on to learn why.

Meta Platforms shares fell 12.97% over the past week as a string of legal setbacks and mounting concerns over heavy AI-driven spending weighed on investor sentiment. The stock slid to fresh 52-week lows after U.S. juries in California and New Mexico ruled that Meta’s platforms, including Facebook and Instagram, were negligently designed, addictive for young users, and insufficiently protected from online predators, with one case resulting in a $375 million damages award. The verdicts are being compared to Big Tobacco’s landmark lawsuits in the 1990s, raising fears of a wave of copycat cases, higher regulatory scrutiny, and potentially long-lasting reputational damage for the social media giant.

At the same time, investors are increasingly uneasy about Meta Platforms’ outsized capital spending on artificial intelligence, just as legal risk is rising. The company has hiked its planned investment in a new AI-focused data center in El Paso, Texas, from $1.5 billion to $10 billion, part of a broader plan to spend $115 billion to $135 billion in capex in 2026 versus $72.2 billion last year. While the El Paso site is expected to support 1 gigawatt of capacity and create thousands of construction and on-site jobs, the sheer scale of spending is pressuring free cash flow in the near term and amplifying worries that the financial payoff from AI could take years to materialize.

Despite the sharp share price drop and legal overhang, Wall Street remains broadly bullish on Meta Platforms, reflecting confidence that its AI strategy will eventually drive growth. Analysts highlight Meta’s use of advanced AI systems to improve ad targeting, engagement, and monetization across Facebook, Instagram, WhatsApp, and newer formats like Reels and business messaging. The stock carries a Strong Buy consensus rating, with multiple analysts projecting more than 50% upside from current levels, arguing that AI-enhanced advertising, expanding commerce tools, and additional services such as Meta Verified could together more than offset today’s legal and spending headwinds over the long term.