Meta’s AI Pivot: Should You Buy, Sell, or Hold META Stock?

Meta's Strategic Shift Toward AI

Meta Platforms, the tech giant behind Facebook, Instagram, and WhatsApp, is pivoting its focus from the metaverse to artificial intelligence (AI). This strategic shift comes four years after the company rebranded from Facebook to Meta Platforms, emphasizing its commitment to the metaverse as a virtual space for work, play, and social interaction. However, the company is now doubling down on AI, signaling a major change in its priorities and investment strategy.

In its third-quarter earnings release, Meta outlined plans to accelerate its AI infrastructure, nearly doubling its capital spending to a range of $70 billion to $72 billion. This aggressive investment reflects the company’s ambition to become a dominant player in the competitive AI landscape. Despite the stock dropping sharply after the earnings report, Meta’s financial performance exceeded analyst expectations. Its revenue increased by 26% year-over-year to $51.24 billion, driven by a 26% annual increase in revenue from its family of apps, which generated $50.77 billion.

The company’s family daily active people (DAP) reached 3.54 billion in September 2025, up 8% year-over-year, with ad impressions across its apps increasing by 14% from the previous year. These metrics underscore the continued engagement and growth of Meta’s core social media platforms, even as it shifts focus toward AI.

Challenges and Opportunities in the AI Space

While Meta’s pivot to AI is ambitious, the company faces significant challenges in the highly competitive AI market. Major tech players are vying for market share, and Meta’s success will depend on its ability to innovate and scale its AI initiatives effectively. The company’s plan to lay off over 1,000 employees in its virtual reality (VR) division, affecting 10% of the hardware team responsible for Quest VR headsets and Horizon Worlds, highlights its commitment to reallocating resources toward AI development.

Despite these challenges, Meta is well-positioned to capitalize on the growing demand for AI-driven products. The company is reportedly in discussions with eyewear partner EssilorLuxottica to double the production of its AI-enabled Ray-Ban smart eyeglasses by the end of this year. With a production target of 20 million units or more, and the option to increase to over 30 million, Meta is responding to unprecedented demand for its wearable technology. Although the international rollout of the eyeglasses has been paused, the company is expected to overcome this hurdle soon.

Meta’s AI initiatives are further bolstered by its recent launch of the "Meta Compute" program, which aims to develop advanced AI infrastructure while managing its global data centers and supplier collaborations. This program is part of the company’s broader quest for superintelligence, positioning Meta at the forefront of AI innovation.

Analyst Sentiment and Stock Performance

Wall Street analysts remain bullish on Meta’s stock, with a consensus "Strong Buy" rating. Of the 55 analysts covering the stock, 44 rate it a "Strong Buy," three suggest a "Moderate Buy," and eight recommend a "Hold." The consensus price target of $838.25 represents a 35.2% upside from current levels, while the street-high target of $1,117 indicates an 80% upside. Analysts cite Meta’s cost management and earnings growth potential as key drivers of their optimism.

However, the stock has underperformed in recent months, gaining only 1.46% over the past 52 weeks and declining by 11.76% over the past six months. After reaching a 52-week high of $796.25 in August 2025, the stock is down 22% from that peak. Following the third-quarter results, the stock dropped 11.3% intraday on October 30, 2025, reflecting investor uncertainty about the company’s aggressive AI strategy.

In conclusion, Meta’s pivot to AI presents both risks and opportunities. While the company faces stiff competition and investor skepticism, its strong financial performance, robust user engagement, and analyst support suggest that its stock may still be a solid investment. As Meta continues to invest heavily in AI infrastructure and innovation, investors will be closely watching the company’s ability to execute its vision and deliver long-term growth.