Meta's Strategic Pivot: A New Chapter in Its AI Investment Journey

Meta pauses open-source AI, invests billions in infrastructure, and pivots to consumer features. Analysts watch for ROI as stock lags highs ahead of Q1 earnings.

Meta Platforms, Inc. is undertaking a fundamental realignment of its artificial intelligence strategy. Spearheaded by Chief AI Officer Alexandr Wang, the social media giant is temporarily stepping back from its previous commitment to open-source development. This shift comes in response to internal assessments indicating that its Llama-4 model has fallen behind rivals from Google and OpenAI in key areas such as reasoning and coding capabilities.

A Phased Approach Replaces Open Source

The company's next-generation AI models, developed internally under the codename "Avocado," are slated for an initial release as proprietary systems. Meta's revised plan involves a private evaluation phase, after which select models may be released under open-source licenses. This staggered, tiered strategy marks a clear departure from the approach taken with its earlier Llama series.

Concurrently, the strategic focus is also shifting. Rather than prioritizing enterprise applications, Meta is now channeling efforts toward consumer-facing features. Enhanced, integrated shopping tools represent one area of concentrated development under this new consumer-centric directive.

Billions Allocated for AI Infrastructure

This strategic overhaul is backed by substantial capital investment. In June 2025, Meta acquired a 49% stake in Scale AI—the company founded by Alexandr Wang—for approximately $14 billion. Further cementing its infrastructure expansion, Meta recently secured a long-term agreement with the Nebius Group valued at $12 billion. This deal includes an option for an additional $15 billion in computing capacity over the coming five years.

The scale of spending is monumental. For the 2026 fiscal year, Meta has guided capital expenditures to a range of $115 to $135 billion, a significant increase from the $72 billion spent the prior year. These investments are already yielding results in its core business: the company reports that AI-driven tools like Advantage+ are improving click-through rates and campaign efficiency within its advertising division.

Share Performance and Analyst Sentiment

Meta's stock currently trades approximately 30% below its 52-week high of $796.25 and is down about 14% since the start of the year. The share price faced additional pressure following the complete divestment by Norges Bank, which liquidated its entire position of 31.4 million shares at the end of 2025.

Despite recent volatility, analyst sentiment remains cautiously optimistic, though price targets have been adjusted. Wells Fargo reduced its target to $765 in early April, followed by Morgan Stanley's revision to $775 in late March. The median price target among analysts stands near $840.

All eyes are now on the first-quarter 2026 earnings report, scheduled for April 29. Market experts anticipate revenue of $55.42 billion, compared to $42.31 billion in the same period last year. The central question for investors will be whether the massive AI expenditures will ultimately protect the company's profit margins or increasingly weigh them down.