Meta’s Strategic Pivot: Cost Discipline Meets AI Development Delays

Meta Platforms finds itself at a strategic crossroads, balancing aggressive cost-cutting measures against emerging concerns over its artificial intelligence roadmap. This dual narrative is creating a complex investment thesis for the market, where optimism over improved financial efficiency is tempered by worries about competitive positioning in the critical field of generative AI.

Despite the mixed news flow, financial analysts have recently reaffirmed their positions on the social media giant's stock. In early December, several firms updated their assessments, demonstrating continued, though cautious, confidence.

• Rosenblatt Securities maintained its "Buy" recommendation, setting a price target of $1,117 and highlighting the potential from Meta's strategic reallocation toward AI.
• Arete Research upgraded the equity to a "Buy" rating, with a target price of $718.
• Cantor Fitzgerald continues to rate the shares as "Overweight," citing a $720 price objective.

From a technical perspective, the stock is in a consolidation phase. Currently trading near 563 euros, it sits just below key moving averages—the 50-day at 568.48 euros and the 200-day at 584.78 euros. A sustained breakout above this resistance zone would be required to signal a new upward trend. Investors are also monitoring the approaching ex-dividend date of December 15.

Reality Labs Faces Deep Spending Cuts

A significant factor influencing current market sentiment is a reported major restructuring within Meta's Reality Labs division. Information emerging on Wednesday indicates plans to reduce expenditures on Metaverse initiatives by as much as 30 percent. Market experts view this move as a pivotal shift in capital allocation, signaling a pullback of resources from long-term virtual reality projects toward more immediate opportunities in artificial intelligence and smart glasses.

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

This strategic correction directly addresses longstanding investor criticism over the segment's substantial losses. By tightening spending, the company aims to bolster its operating margins and free up capital for the fiercely competitive generative AI arena.

AI Product Timeline Experiences Setbacks

Counterbalancing the optimism on costs are confirmed challenges within Meta's product development pipeline. The launch of the highly anticipated Llama 4 AI model has been delayed, dampening near-term expectations for the company's AI capabilities.

Compounding this, the development of its successor, internally code-named "Avocado," has reportedly been pushed back to 2026. These delays are applying pressure to the stock's recovery, as the market scrutinizes Meta's ability to keep pace with rivals in deploying next-generation foundation models. Adding to the headwinds, the European Commission initiated an antitrust investigation on December 4 concerning AI integration within WhatsApp, introducing a new layer of regulatory uncertainty.