New York, March 26, 2026, 17:03 EDT.
Shares of Meta Platforms dropped close to 8% on Thursday, following a pair of U.S. verdicts that heightened concerns Facebook and Instagram might need to overhaul engagement-boosting features critical to advertising. 1
Timing is key here. Meta’s overhaul centers on AI: the company’s annual filing flags AI, wearables, youth, and platform integrity as central goals for 2026. In January, Meta warned investors that capital spending could soar to anywhere between $115 billion and $135 billion this year, all in service of chasing “personal superintelligence”—a hypothetical milestone where AI outstrips humans at a range of tasks. Back then, Gabelli Funds portfolio manager John Belton wasn’t fazed by the price tag, calling the valuation “not that demanding” while the ad business kept delivering. 2
A Los Angeles jury has hit Meta and Alphabet’s Google with a $6 million penalty, holding them responsible after a young woman blamed her depression and suicidal thoughts on early addiction to Instagram and YouTube. In a separate case out of New Mexico, Meta faces a $375 million judgment—jurors said the company misled users about child safety and enabled exploitation. Meta pushed back, announcing plans to appeal both decisions. Both lawsuits zeroed in on how the platforms are designed, sidestepping user-generated posts and instead pressing the boundaries of Section 230, the 1996 U.S. law that largely insulates tech companies from being held liable for what users publish. 3
A rough session for tech left its mark. Nasdaq dropped 2.38%, sliding into correction territory. Alphabet shed over 3%. Investors faced another round of Middle East worries, oil price gains, and stubborn inflation risks. 4
Adam Sarhan, chief executive at 50 Park Investments, said investors are now reassessing legal and regulatory risk in the wake of the verdicts. “These decisions don’t break the business model today, but they raise the range of outcomes around future cash flows and margin structure,” he said. 5
Meta continued trimming its workforce this week, laying off a few hundred people on Wednesday from Reality Labs—the division focused on augmented and virtual reality—as well as from its social-media and recruiting teams. Earlier in the month, Reuters said Meta was considering broader reductions, with up to 20% of jobs on the line. Rosenblatt Securities analyst Barton Crockett figures such a move would translate into about $6 billion in savings and a roughly 5% bump in adjusted core earnings. Meta responded that its teams routinely undergo restructuring, and it makes efforts to reassign impacted staff where possible. 6
Still, Meta isn’t slowing down. The company on Thursday announced it’s bumping up its planned investment in the El Paso, Texas, AI data hub to $10 billion—over six times what it first pledged. The facility is set to hit 1 gigawatt of capacity ahead of its 2028 debut. That kind of money keeps Meta locked in competition with Alphabet and Microsoft, as tech giants hustle to secure the computing firepower they need. 7
Top brass at the company stand to benefit if their big bet pays off. Meta handed out fresh stock options this week to six senior execs—compensation tied to much loftier share prices, with the upper tier pegged to a valuation north of $9 trillion. Zuckerberg, notably, isn’t among the recipients. 8
The real question is what happens after this. In May, the New Mexico case moves into its second phase—here, the judge could weigh tougher age verification, limits on the number of notifications minors receive, and new restrictions on those endless content feeds. The state’s not ruling out pushing for a bigger award, either. According to eMarketer analyst Max Willens, it’s still a stretch to get courts to force deep changes to the underlying recommendation engines. Even so, he says this next stage “could be more consequential to social media platforms than the first.” 9
