Meta Shares Plunge as Zuckerberg’s AI Ambitions Spark Investor Déjà Vu

Despite posting impressive third-quarter results, Meta Platforms experienced a dramatic selloff that erased approximately $300 billion in market capitalization over just four trading sessions. The social media giant's shares fell around 17% as investors reacted with alarm to CEO Mark Zuckerberg's announcement of massive forthcoming investments in artificial intelligence infrastructure.

Meta's operational performance for Q3 2025 would typically inspire investor confidence. Revenue climbed 26% to $51.2 billion, while adjusted earnings per share reached $7.25—both metrics exceeding Wall Street projections. The company's advertising business demonstrated remarkable strength, with revenue surging to $50.1 billion driven by a 14% increase in ad impressions and 10% higher prices per advertisement.

The positive earnings report was quickly overshadowed by revised expenditure guidance. Management now anticipates capital investments between $70 and $72 billion for 2025, with even higher spending projected for 2026. This aggressive spending targets Meta's newly established "Superintelligence Labs" division, which aims to develop what Zuckerberg describes as "personal superintelligence for everyone."

Echoes of Metaverse Spending Spree

Market analysts responded with immediate concern, drawing uncomfortable parallels to the company's previous massive investments in the metaverse. Tiffany Wade of Columbia Threadneedle Investments captured the prevailing sentiment: "This feels like a return to Meta's earlier approach of channeling funds into questionable ventures without adequate return requirements. Shareholder patience has reached its limit."

Oppenheimer's Jason Helfstein downgraded the stock, noting: "These enormous superintelligence investments despite unclear revenue potential remind us of the metaverse expenditures in 2021/2022." The comparison evokes painful memories for investors—during the metaverse push, Meta shares declined 77% from their peak.

Compounding investor anxiety is Meta's disadvantage compared to competitors. While Microsoft and Google can offset AI investments through profitable cloud computing divisions, Meta lacks this revenue stream. The company has provided limited details about how it plans to monetize its AI ambitions.

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

Regulatory and Legal Challenges Mount

Beyond spending concerns, Meta faces escalating legal complications. The Motion Picture Association issued a cease-and-desist letter regarding Instagram's "PG-13" content labeling system, alleging trademark infringement. Meanwhile, French authorities have accused the company of distributing discriminatory job advertisements through its algorithms.

Additional financial risks loom from pending litigation concerning youth protection standards and antitrust proceedings that could potentially force the separation of WhatsApp and Instagram from the parent company.

Solid Operations Amid Strategic Uncertainty

Meta's core business operations remain fundamentally sound. The "Family of Apps" portfolio—encompassing Facebook, Instagram, WhatsApp, and Threads—now boasts 3.54 billion daily active users, representing 8% year-over-year growth. Even the Reality Labs hardware division showed progress, increasing revenue by 74% to $470 million, though it still recorded a $4.4 billion operating loss.

Looking ahead, management projects fourth-quarter revenue between $56 and $59 billion. With a forward P/E ratio of approximately 22, Meta shares currently trade at the most attractive valuation among the "Magnificent Seven" technology stocks. Analyst consensus remains generally positive, with 46 of 57 covering researchers maintaining "Strong Buy" recommendations and an average price target of $872.

The central question for investors isn't whether Meta can achieve technological leadership in artificial intelligence, but whether these ambitions will ever generate satisfactory returns for shareholders. Until Zuckerberg provides clearer monetization strategies for his AI vision, uncertainty will likely continue to overshadow the company's operational strengths.