Regulatory Hurdles and Investor Scrutiny Mount for Meta

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Meta Platforms Inc. is navigating a fresh regulatory challenge from Italy, adding to existing Wall Street concerns over the company's substantial investments in artificial intelligence. The Italian Competition Authority (AGCM) issued a ruling on December 24, 2025, prohibiting the tech giant from blocking competing AI chatbots from its WhatsApp Business API.

The AGCM determined that Meta's intended policy constituted an "obvious abuse" of its dominant market position. The company had planned to restrict the WhatsApp Business API for AI chatbots from providers like OpenAI and Perplexity starting in January 2026, a move the Italian authority has now provisionally halted.

Meta has rejected the ruling as "fundamentally flawed" and announced its intention to appeal. The social media conglomerate contends that the Business API was never designed to function as a distribution platform for third-party AI chatbots. This development coincides with an ongoing investigation by the European Commission into the same matter.

Investor Patience Wears Thin Over AI Spending

As regulatory pressures intensify, Meta is also confronting growing skepticism from its investor base. The company's shares currently trade approximately 16% below their all-time high of $790, reached on August 12. This decline was triggered by CEO Mark Zuckerberg's announcement in the quarterly report to further accelerate spending on artificial intelligence initiatives.

In a landmark financing move during October, Meta secured $27 billion for its Hyperion supercomputer project—the largest private credit deal in Wall Street history. However, analysts like BNP's Stefan Slowinski point out a strategic disadvantage for Meta compared to rivals Alphabet and Amazon: unlike its competitors, Meta lacks a major cloud services division to monetize excess data center capacity.

Market Experts Eye Upcoming Earnings for Catalysts

Despite the headwinds, some analysts see potential for a shift in sentiment. Morgan Stanley suggests the January earnings report could represent a possible "inflection point" for the stock. Analyst Brian Nowak highlights the Superintelligence Labs as an undervalued segment, proposing that in a bullish scenario, the share price could reach $1,000.

In a separate assessment, Baird slightly reduced its price target from $820 to $815 but reaffirmed its "Outperform" rating. The firm cited several positive factors:
* Progress on the next-generation Llama AI model
* Monetization potential within WhatsApp and Threads
* Possible margin signals for the first fiscal quarter

Strategic Pivot from Metaverse Offers Silver Lining

One area providing relief for investors is Meta's strategic pullback from the Metaverse. The company has confirmed significant budget reductions within its Reality Labs division, which reported a $4.4 billion loss in the third quarter. Resources are being reallocated toward AI glasses and wearables—products with clearer commercial pathways, such as the Ray-Ban smart glasses collaboration.

The forthcoming annual report in January will indicate whether Meta is returning to the "efficiency strategy" it championed in 2023. With its Meta AI assistant now boasting one billion monthly active users, the company commands immense reach. The pivotal question for investors remains how effectively this vast user base can be translated into sustainable revenue streams.