Investors in Meta Platforms (META) received some negative news last Friday, as the company reportedly delayed the release of its latest AI model, “Camel”. This marks the latest setback for the social media giant, whose stock price has fallen 19% over the past six months (as of March 13). Market observers largely attribute this decline to concerns over its massive investments in artificial intelligence infrastructure.
Delays in the release of such models certainly raise concerns, especially considering Meta’s capital expenditure plans in the AI field—projected to be between $115 billion and $135 billion by 2026. Even so, the current stock price decline seems, upon analysis, to be somewhat of an overreaction.
In fact, Meta’s core advertising business remains robust. The company’s revenue in 2025 reached $201 billion, a year-over-year increase of 22%, with 98% coming from advertising. At the same time, Meta maintains an excellent operating margin of 41%. In comparison, Alphabet, which also heavily relies on advertising revenue, posted an operating margin of 32% last year.
Although Meta has experienced high-profile missteps, the latest being the delay of the “Camel” model, and is investing heavily in the AI race—which has now become the norm for top tech companies (Alphabet and Amazon subsequently announced even larger capital expenditure plans)—it’s important to recognize that Meta remains an exceptionally profitable and highly efficient business that continues to achieve significant revenue growth.
Following the recent stock price correction, the shares also appear reasonably priced. Meta’s forward P/E ratio is only 20 times, which is quite cheap for a tech giant. By this important metric, it has become the most affordable stock among the “Magnificent Seven.” For investors looking for undervalued tech stocks, Meta is worth paying attention to.
Meanwhile, Meta also announced that its Quest headset users will no longer be able to access Horizon Worlds—a virtual space where users can gather and play games using cartoon avatars. This move marks a further scaling back of CEO Mark Zuckerberg’s former core strategy, the “metaverse” vision.
Meta stated that starting June 15, users will no longer be able to create, publish, or update virtual worlds or access Meta Horizon Worlds via their Quest headsets. However, users will still be able to access these virtual spaces through the Meta Horizon mobile app.
This adjustment follows layoffs within the Reality Labs team, which is responsible for headsets and virtual reality business. In January, Meta began cutting approximately 1,000 positions in this division, while also shutting down some virtual reality game and content studios. Andrew Bosworth, the Chief Technology Officer in charge of Reality Labs, stated in an internal memo at the time that the company would shift its focus towards mobile experiences rather than fully immersive virtual worlds accessed through headsets.
Within Reality Labs, resources are also being redirected from virtual reality games to wearable devices that support Zuckerberg’s AI vision, such as the Ray-Ban Meta smart glasses.
