Meta Faces Headwinds as Analysts Trim Price Target Amid Regulatory and Spending Concerns

Meta Platforms, the social media giant led by Mark Zuckerberg, is navigating a complex landscape of ambitious long-term investment and mounting short-term pressures. While the company is preparing a major artificial intelligence offensive for 2026, recent developments have prompted a notable shift in sentiment from Wall Street and institutional investors.

In a move reflecting near-term caution, analysts at Wedbush Securities recently lowered their price target for Meta shares from $920 to $880. The firm maintained its "Outperform" rating but cited rising operational expenses and aggressive capital expenditures as factors likely to pressure profit margins. The core concern is that the massive investments required for AI infrastructure development are weighing on profitability, at least for the time being.

This analyst skepticism appears to be mirrored in the actions of major investors. Recent regulatory filings revealed significant selling activity during the third quarter. Amiral Gestion divested 47 percent of its stake, while NatWest Group reduced its position by 23.5 percent. Adding to the selling pressure, company insiders, including Chief Technology Officer Andrew Bosworth, have sold approximately $26.5 million worth of stock over the past 90 days.

European Regulatory Challenge Emerges

A significant new risk has materialized in Europe, a key market for the company. Austria's highest court has ruled that Meta's "pay or consent" advertising model is unlawful. This framework requires users to either consent to personalized ad tracking or pay a subscription fee for an ad-free experience. Should this legal precedent gain traction across the European Union, Meta could be forced to undertake a fundamental overhaul of its core business model in the region, posing a substantial threat to its revenue stream.

Ambitious AI Strategy Marred by Internal Friction

Despite these challenges, Meta continues to push forward aggressively with its AI development plans. The company's Meta Superintelligence Lab (MSL) is working on two major multimodal models slated for release in the first half of 2026:

Should investors sell immediately? Or is it worth buying Meta?

• Project "Mango": A model focused on image and video generation.
• Project "Avocado": An advanced upgrade for text processing.

The path to development, however, is reportedly not without internal strain. Sources indicate that Alexandr Wang, founder of Scale AI and a key figure in Meta's AI leadership, has expressed frustration with Zuckerberg's hands-on management style. These tensions highlight the difficulties a large corporation faces in blending startup-like agility with established corporate structures, despite having invested roughly $15 billion in Scale AI.

Solid Financial Foundation Meets Lofty Spending Plans

Financially, the company's fundamentals remain robust. Third-quarter results showed revenue climbing 26.2 percent year-over-year to $51.24 billion. Earnings per share came in at $7.25, comfortably surpassing analyst expectations of $6.74.

The central question for investors now revolves around the return on the company's enormous planned investments. Capital expenditures for 2025 are projected to be between $70 and $72 billion, with a further increase anticipated for 2026. The market is looking for clarity on how the AI initiatives—"Mango" and "Avocado"—will ultimately monetize and justify these soaring infrastructure costs.

Technical and Fundamental Crossroads

From a technical analysis perspective, Meta's stock is currently trading slightly below its 200-day moving average, a level often watched for signals about future direction. The consensus analyst price target sits near $790, which remains above the current trading price.

All eyes are now on the upcoming fourth-quarter earnings report, where revenue is projected to land between $56 and $59 billion. Investors will be scrutinizing management's commentary for a credible path to monetizing the AI offensive and managing the dual pressures of regulatory scrutiny and escalating capital investment.