Meta’s AI-Driven Layoff Lawsuit Intensifies as $145 Billion Capex Plan and Q2 Earnings Loom

Meta shares gain 9.7% in a week as 26 employees sue over AI-based termination decisions; Q2 results due July 29 with capex raised to $145B.

The market has largely shrugged off the legal storm brewing at Meta Platforms. Its stock closed at €579.20 on Tuesday, gaining 9.74% over seven sessions and 13.17% over 30 days, with a relative strength index of 65.2 and an annualized volatility of 49.41%. Since the start of the year, the shares have advanced 4.32%, though they remain 5.41% lower over the past twelve months. At roughly €1.48 trillion in market capitalization, the stock sits 14.55% below its 52-week high of €677.80 set on July 31, 2025, and 28.11% above the trough of €452.10 from March 27, 2026. The technical backdrop remains constructive: the stock is trading about 5% above its 200-day moving average of €547.46, a level that often signals a healthy medium-term trend.

That resilience is notable because the company is facing one of the most unusual employment lawsuits in recent corporate history. Twenty-six current and former employees filed a complaint on July 13, 2026, in federal court in Oakland, California, alleging that Meta’s internal artificial-intelligence systems — including the Metamate platform, keystroke monitoring, and token-usage analytics — disproportionately singled out workers on protected leave for termination. The group includes eight women on maternity leave and four men on parental leave. The suit targets the 8,000 job cuts announced in May 2026, roughly 10% of the workforce, with the actual separations scheduled to take effect on July 22. It is believed to be the first case of its kind against a major U.S. company that challenges the use of AI in layoff decisions as a matter of principle.

Meta has pushed back against the allegations. Spokesperson Andy Stone told The Next Web that the decisions were ultimately made by humans, not algorithms, and that the claims are unfounded. The case arrives on the heels of a similar ruling against the software firm Workday in June 2026 over AI-powered hiring practices, and it carries added political weight: the Trump administration has recently dialed back enforcement of such discrimination accusations. The plaintiffs, citing indirect discrimination under Title VII, are seeking a temporary restraining order and an independent audit of the systems involved.

The legal battle unfolds just as Meta prepares to report its second-quarter 2026 results after the U.S. market close on July 29, with a conference call scheduled for 1:30 p.m. Pacific time. In the first quarter, revenue came in at $56.3 billion, ahead of the analyst consensus of $55.5 billion, though earnings per share of $10.44 were inflated by an $8 billion tax benefit. For Q2, analysts are forecasting revenue in a range of $58 billion to $61 billion. At the same time, the company has ratcheted up its capital expenditure plans for the full year to between $125 billion and $145 billion, up from an earlier projection of $120 billion to $135 billion. A major driver is the expansion of a Louisiana data center to 5 gigawatts of capacity, requiring an investment of over $50 billion.

The workforce has already begun to shrink, with headcount falling to 77,900 at the end of the first quarter, a 1% decline from the prior quarter. How the pending layoffs and the lawsuit will affect employee morale and near-term sentiment remains an open question. Investors will be watching for any interim court rulings as well as Meta’s commentary on the capex ramp and the legal risk during the earnings call. For now, the stock’s upward momentum suggests the market is betting that the AI-driven infrastructure bet will pay off — even as the same technology lands the company in court.