Meta’s stock movement on recent days has been driven by a mix of stronger- than-expected quarterly results, elevated AI-related spending guidance, and some one-time tax or non-operational charges that amplified investor concerns about near-term profitability and capital allocation. Key factors behind Meta’s recent drop

• AI investment and returns debate: Meta has been signaling aggressive spending on AI infrastructure and talent as it scales an ambitious AI push. Some analysts question whether this level of investment will translate into commensurate revenue and profit in the near term, leading to skepticism about the payoff from AI initiatives [Morningstar note cited for context].

• Higher capital expenditure guidance: The company raised its 2025 capex target again, which can weigh on near-term margins and raise questions about the timetable for returns on AI-related infrastructure and software investments [CNBC earnings coverage].

• One-time tax and non-operating items: Meta disclosed a one-time tax hit on the Q3 results, which distorted year-over-year comparisons and contributed to a weaker stock reaction despite solid operational performance (revenue growth and user metrics) [CNBC/Yahoo Finance reporting].

• Comparative spending discipline vs. growth expectations: After a period of aggressive AI-related spending, investors and some analysts are weighing whether Meta’s investments are producing the expected operational leverage, especially when combined with ongoing regulatory challenges and antitrust scrutiny in the U.S. [CNBC overview of earnings and guidance].

Recent context and scenarios

• Investor sentiment can be sensitive to the pace of AI-related investment versus the clarity of measurable returns. If management communicates early signals of meaningful revenue or efficiency gains from AI initiatives, the stock could stabilize or rebound; if the market perceives diminishing marginal returns or stretched margins, the stock may remain volatile or decline further [Morningstar and CNBC analyses referenced above].

• Macro and sector dynamics also play a role. Even with strong earnings, Meta competes in a high-expenditure environment against peers increasing AI infrastructure and cloud spend, which can influence relative valuations and market reaction [CNBC AI spending comparisons in the same period].

Bottom line

• The recent price drop reflects investors' doubts about the near-term profitability of Meta’s aggressive AI investment strategy, concerns over higher capex and operating costs, and the impact of one-time tax charges on reported results. Over the next few quarters, market focus will likely hinge on tangible evidence of AI-driven monetization, efficiency improvements, and how effectively the company manages its cost base while maintaining user growth and engagement.