Meta’s Strategic Pivot: AI Ambitions and Nuclear Power Reshape Its Future

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As Meta Platforms prepares to release its quarterly earnings, investors are closely evaluating the company's significant strategic realignment. The social media giant is executing a profound shift, scaling back its once-prioritized metaverse initiatives while making massive, long-term commitments to artificial intelligence infrastructure and a novel energy source.

The company's shares currently trade around $620, approximately 22% below their 52-week peak of $796.25. Technical analysts from Trefis identify a support zone between $589 and $651. With a forward P/E ratio of about 21, the stock trades below the broader technology sector average, reflecting market uncertainty about this strategic transition.

In a clear move toward capital discipline, Meta initiated layoffs affecting over 1,000 positions within its Reality Labs division last week. According to an internal memo from Chief Technology Officer Andrew Bosworth reported by Bloomberg, this represents roughly 10% of the division's 15,000-person workforce.

Teams focused on developing VR headsets and virtual social networks—core products of Mark Zuckerberg's metaverse vision since 2020—are primarily impacted. Since its inception, Reality Labs has consumed over $60 billion with minimal financial returns, as noted by Reuters. Resources are now being redirected toward AI wearables and smartphone-integrated AI features. Products with clearer market traction, such as the Ray-Ban smart glasses developed with EssilorLuxottica, are taking precedence. Bosworth scheduled an in-person meeting to explain the internal reorganization.

Securing Power for the AI Era: A Nuclear Bet

Concurrently, Meta is aggressively securing energy for its expanding AI data centers. On January 9, the company announced agreements with Oklo, Vistra, and TerraPower, securing up to 6.6 gigawatts of nuclear power capacity by 2035.

Key Energy Agreements

• Vistra: Executed 20-year power purchase agreements for more than 2.1 GW from three existing nuclear plants—Beaver Valley in Pennsylvania, and Perry and Davis-Besse in Ohio—including planned capacity upgrades.
• Oklo: Formed a partnership to develop a 1.2 GW energy campus in Pike County, Ohio. Plans include up to 16 Aurora micro-reactors, with the first phase targeted for 2030.
• TerraPower: Provided financial support for two 345 MW sodium fast reactors and secured an option for power from up to six additional units (totaling 2.1 GW) by 2035.

These commitments follow a June 2025 agreement with Constellation for power from the Clinton Clean Energy Center in Illinois. The additional capacity will feed into the PJM regional grid and is crucial for supporting the Prometheus AI supercluster in New Albany, Ohio, which is projected to require at least 1 GW of power starting in 2026.

Analyst Confidence Endures Despite Stock Weakness

The overall analyst outlook remains bullish, even with recent share price declines. The consensus price target among covering analysts is $832.05, according to data from public.com. Of the 40 analysts covering the stock, 53% rate it a "Strong Buy" and 43% a "Buy."

• Wells Fargo: On January 12, the firm slightly lowered its price target from $802 to $795 but maintained its "Overweight" rating. Analysts framed the adjustment as a "valuation reset" rather than a reaction to deteriorating fundamentals. They project earnings per share of $31-$32 for 2026 and anticipate a growth catalyst from the next-generation Llama AI model in the first half of that year.
• Mizuho: Analyst Lloyd Walmsley named Meta a top idea for 2026 on January 18, reiterating a "Buy" rating and a $815 price target. He cited improving advertising returns on investment, positive expectations for Meta Business AI, and additional monetization potential for WhatsApp.

Upcoming Earnings: A Litmus Test for Strategy

All eyes turn to Meta's fourth-quarter and full-year 2025 results, scheduled for release after the market closes on Wednesday, January 28. A conference call is set for 4:30 p.m. Eastern Time.

Key metrics to watch include:

• Q4 EPS Consensus: $8.29 (compared to $8.02 in the year-ago quarter)
• Revenue Momentum: Meta reported year-over-year revenue growth of 26% for the first nine months of 2025.
• Investment Outlook: Capital expenditures for 2025 are expected around $71 billion, with management guiding to a "significantly higher" level for 2026.

The upcoming report will serve as a critical test for Meta's new direction. Investors will scrutinize management's commentary on several fronts: the specifics of 2026 investment plans for AI infrastructure, progress updates on Llama model development and rollout, and tangible evidence that AI-driven advertising improvements are accelerating revenue growth.

The long-term nuclear contracts underscore AI's paramount importance in Meta's future, while the Reality Labs restructuring points to stricter financial discipline. The central question is whether the company can successfully execute this strategic pivot and deliver the operational results investors expect in the coming quarters.