Why Meta Stock Is Down Today and Why One Analyst Says Avoid the Dip

**Meta Platforms (NASDAQ:META) **shares are down 4% today as investors digest reports that the company may need more time to roll out its next major AI model.

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According to recent reports, the company has delayed the launch of a new internal model, known as “Avocado,” after it reportedly fell short of internal performance expectations. The model had been expected to represent a major step forward in Meta’s AI strategy, powering improvements across products such as Instagram, Facebook, and its growing suite of AI assistants. A delay raises questions about how the company’s technology stacks up against competing systems from rivals like OpenAI and Alphabet’s Google.

The news arrives at a time when Meta is committing enormous resources to AI infrastructure. CEO Mark Zuckerberg has outlined plans for tens of billions of dollars in spending on data centers, chips, and related systems designed to support future AI workloads. With that much capital tied to the strategy, reports suggesting development may be running behind schedule can easily rattle investor confidence.

But if you think about buying the dip today, Arete Research’s Rocco Strauss believes investors may want to pause before jumping in. The analyst argues that Meta’s current strategy carries risks that the market may not be fully appreciating.

“META is fully committed to an open-ended investment cycle,” Strauss wrote, arguing that the company’s aggressive push into AI marks the end of the efficiency-driven margin expansion investors saw after the 2022 downturn. That shift could weigh on profitability over the next several years; Strauss expects EBIT margins to decline by roughly 630 basis points in 2026, while free-cash-flow margins could fall by about 19 percentage points compared with 2024 levels.

Revenue expectations could also prove a bit too optimistic. Strauss points to factors such as slower gains from Reels engagement, higher advertising loads, and currency headwinds that could weigh on results. As such, the analyst forecasts 2026 sales about two percentage points below Street expectations, equivalent to about $5 billion less revenue in the second half of the year.

Another concern centers on Meta’s business model. Unlike hyperscaler peers such as Amazon and Alphabet, which can offset massive AI infrastructure spending with revenue from cloud services, Meta lacks a large third-party cloud business to absorb those costs.

Strauss also argues that Meta’s AI story remains more “visionary and consumer-centric,” with initiatives such as Meta Compute, enterprise services, and subscription tiers still in early stages that could take years to scale.

Given that outlook, Strauss recently downgraded META shares from Buy to Neutral and cut his price target to $676 from $732. (To watch Strauss’ track record, click here)

The broader Street, however, remains far more upbeat on META’s prospects. According to data from TipRanks, Meta stock carries a Strong Buy consensus rating based on 44 analyst reviews, including 39 Buy ratings and 5 Holds, with no Sell calls. The average price target currently stands at $858.86, which suggests ~40% upside from recent levels. (See META stock forecast)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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