Actions of Metaplatforms (NASDAQ: META) They have fallen 30% from their peak. Such declines are rare for the social media giant and have occurred only a few times in the past 10 years. I must confess that I bought the dip in droves.
The stock’s decline probably doesn’t come down to one thing; Many Magnificent Seven stocks have fallen from their highs. Investors may be concerned about the company’s aggressive spending on artificial intelligence (AI). If that weren’t enough, Meta just lost a court battle that could open the door to significant damages in future litigation.
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Here’s why I hit the buy button on Meta stock, despite all that.
While many cloud companies are spending big on AI to build new businesses, Meta is spending on AI to strengthen its own. Well, I’ll exclude Reality Labs for a moment, which has been a real cash cow.
AI is a positive tailwind for several aspects of digital advertising, Meta’s bread and butter. AI is automating ad creation and improving pricing by matching ads to your ideal target audiences. As a result, Meta’s operating cash flow has increased since 2022, which CEO Mark Zuckerberg is pumping back into the company for AI.
Meta still has a lot of riches in terms of future monetization opportunities. There is additional e-commerce potential on Facebook and Instagram. Meanwhile, Meta has only just begun to lean towards ads on WhatsApp and Threads.
The company’s daily active app users reached 3.58 billion in December 2025, a year-on-year increase of 7%. It’s notable that Meta’s audience continues to grow, as it has from such a large base, and represents a vast distribution network for any product or service Meta releases.
Recently, a jury ruled against Meta Platforms in a lawsuit over the safety of social media for young users. It’s a potential historic moment because it could set a precedent by holding social media companies accountable for how young people use their platforms, opening the door to additional litigation and future harm.
While this could cause financial damage to Meta, it may actually strengthen the company’s long-term competitive positioning. Just as tobacco litigation did decades ago, it could ultimately stifle new competition by making it riskier and more difficult to create new social media apps.