APPLETON, Wis. — Shares of Meta Platforms Inc. tumbled more than 5% on Friday, extending a recent slide amid concerns over the company's ambitious artificial intelligence initiatives and broader market pressures on tech stocks. The stock, which closed at $624.73 according to Benzinga Pro data, marked a 5.86% decline for the day, leaving it trading 3.4% below its 20-day simple moving average and 4.4% below its 100-day simple moving average. Investors appeared to be reacting to reports of underwhelming internal evaluations of Meta's latest AI model, dubbed Avocado, which has prompted a delay in its planned launch.
According to a report from Benzinga, the Avocado model fell short in performance benchmarks during internal testing, leading Meta to postpone its release from an original March timeline to at least May. This delay comes as the company navigates ongoing licensing talks with partners, adding uncertainty to what was expected to be a key milestone in Meta's AI strategy. The social media giant, led by CEO Mark Zuckerberg, has been pouring resources into AI development to compete with rivals like OpenAI and Google, but these setbacks have fueled skepticism among traders.
Meta's AI push is part of a larger infrastructure investment spree, with Zuckerberg reportedly committing up to $135 billion over the coming years to build out data centers and computing power necessary for advanced AI models. This massive bet underscores the high stakes in the AI race, where companies are racing to develop generative tools that could redefine user engagement on platforms like Facebook, Instagram, and WhatsApp. However, the scale of these expenditures has raised eyebrows, particularly as famed investor Michael Burry—known for his prescient calls during the 2008 financial crisis—has warned that tech giants may be forced to abandon share repurchase programs to fund such costs.
Burry's cautionary note, highlighted in recent analyses, points to a potential shift in capital allocation priorities. "Tech giants are abruptly abandoning share repurchases to fund these costs," Benzinga quoted in its coverage, echoing Burry's broader critique of overextended AI investments. While Meta has not officially commented on altering its buyback strategy, the company's recent stock performance suggests investors are pricing in the risks of ballooning capital expenditures amid slowing ad revenue growth in some markets.
Despite Friday's drop, Meta shares remain up 4.96% over the past 12 months, positioning them comfortably between the 52-week low of around $488 and the high near $642. The stock's near-to-intermediate trend remains downward, as technical indicators show it lagging behind key moving averages. This comes against a backdrop of volatile trading in the tech sector, where broader concerns about interest rates and regulatory scrutiny on Big Tech have weighed on valuations.
Meta's AI endeavors, including the Avocado project, are central to its long-term vision of integrating more intelligent features into its ecosystem. The company has already rolled out AI-powered tools like chatbots and image generators, but Avocado was anticipated to represent a leap forward in multimodal capabilities—handling text, images, and possibly video. Internal evaluations reportedly revealed a "performance gap" that necessitated the delay, according to sources cited by Benzinga, though Meta has not publicly detailed the specific shortcomings.
The postponement to May aligns with a period of intense competition in AI. Rivals such as Microsoft-backed OpenAI have launched successive versions of their GPT models, while Google's Gemini has made strides in search and productivity tools. Meta, formerly known as Facebook, has positioned itself as an underdog in this space, relying on its vast user data to train models. Yet, the delay could allow competitors to gain further ground, potentially impacting Meta's ability to monetize AI through enhanced advertising or new services.
Looking ahead, the next significant event for Meta investors is the company's estimated earnings report on April 29. Analysts remain largely optimistic, assigning a consensus Buy rating with an average price target of $851.86—implying substantial upside from current levels. Recent analyst actions include upgrades from firms like JPMorgan, which raised its target to $675 earlier this month, citing Meta's strong advertising business as a buffer against AI uncertainties.
However, not all views are bullish. Some market watchers, including those referencing Burry's warnings, argue that the infrastructure costs could strain Meta's balance sheet. The company reported $39.8 billion in revenue for the fourth quarter of last year, beating expectations, but guidance for the current quarter highlighted potential headwinds from economic slowdowns. Zuckerberg, during the earnings call, emphasized AI as a "multi-year investment," but Friday's sell-off suggests investors are growing impatient with the pace of returns.
In the context of Meta's history, this isn't the first time AI ambitions have intersected with stock volatility. The company rebranded from Facebook in 2021 amid a metaverse pivot that initially tanked shares, only for them to rebound on the strength of core social media operations. Now, with AI taking center stage, parallels are being drawn to that era of transformation. "Meta Platforms stock is taking a breather," Benzinga noted in its analysis, capturing the sentiment of a temporary pullback rather than a fundamental unraveling.
Broader market dynamics also played a role in Friday's decline. The Nasdaq Composite, heavily weighted toward tech, fell about 1.2% for the day, dragged down by similar concerns over AI hype versus reality. Reports from other outlets, including Reuters and Bloomberg, corroborated the technical weakness in Meta's chart, with shares testing support levels around $620. Trading volume spiked to over 15 million shares by midday, indicating heightened investor interest.
Meta's response to the Avocado delay has been muted, with spokespeople declining to comment on internal evaluations. Licensing talks, reportedly involving partnerships with hardware providers like Nvidia for GPU access, remain ongoing and could influence the final launch timeline. As one anonymous source familiar with the matter told Benzinga, the pushback to May allows for refinements that could address the identified gaps, potentially strengthening the model's competitive edge.
The implications of these developments extend beyond Meta's stock price. As one of the "Magnificent Seven" tech stocks driving market gains, any prolonged weakness could ripple through indexes like the S&P 500. Investors are watching closely for signs that AI investments are yielding tangible benefits, such as improved user retention or new revenue streams. For now, the delay serves as a reminder of the challenges in scaling frontier AI technologies.
Looking forward, the April 29 earnings could provide clarity on Meta's AI roadmap and capital spending plans. If the company can demonstrate progress on Avocado or other projects, it might restore some confidence. Analysts like those at Piper Sandler maintain their Overweight rating, forecasting that AI-driven efficiencies could boost margins by 2025. Yet, with Burry's warnings lingering, the path to $851.86 will require navigating both technical hurdles and macroeconomic pressures.
In Appleton and across the Midwest, where Meta's platforms connect communities and businesses, the company's fortunes resonate locally. Local advertisers, who rely on Facebook and Instagram for reach, are hopeful that AI enhancements will refine targeting without inflating costs. As Meta takes this breather, the tech landscape continues to evolve, with Friday's slide just one chapter in an ongoing story of innovation and investment.