"This year, one of the better performers among the Magnificent 7 had been Meta Platforms Inc. ( NASDAQ: META). But its third-quarter earnings report raised investor concerns about the company's massive capital spending on artificial intelligence initiatives. In addition, Meta says it plans to make significant cuts to the budget of its Reality Labs metaverse division in the coming year. The stock is down 13.6% since the quarterly report was released."
"Strong quarterly reports earlier this year (despite a tax charge) had lent credence to the claim that Meta would continue to outshine its competitors over the next year. The share price hit an all-time high of $796.25 back in August. Due to the recent pullback, the stock is up 4.9% year over year, underperforming the broader market. Furthermore, the near-term future of the economy is uncertain-just like the markets themselves-and Meta Platforms CEO Mark Zuckerberg is a controversial figure."
"Let's start by addressing the elephant in the room. Investors should not rely on Meta Platforms' Reality Labs metaverse business to drive the company's near-term future growth. In Q3 2025, Reality Labs generated $470 million in revenue, up from $370 million in revenue in the prior quarter. However, during that same time frame, Reality Labs recorded a loss from operations of $4.43 billion."
Meta Platforms experienced a share-price decline after third-quarter results raised concerns about heavy capital spending on artificial-intelligence initiatives. The company plans substantial budget cuts for its Reality Labs metaverse division, which generated $470 million in Q3 2025 revenue but posted a $4.43 billion operating loss. The stock fell 13.6% since the quarterly report and is up 4.9% year over year, underperforming broader markets after an August all-time high of $796.25. Economic uncertainty and CEO Mark Zuckerberg's strategic shifts toward the metaverse and now AI contribute to investor caution, prompting consideration of varied price-target scenarios.
Read at 24/7 Wall St.
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