CANADA – 2025/10/27: In this photo illustration, the Meta AI logo is seen displayed on a smartphone screen. (Photo Illustration by Thomas Fuller/SOPA Images/LightRocket via Getty Images)
SOPA Images/LightRocket via Getty Images
META Platforms stock (NASDAQ: META) has declined by 18.4% within a span of 21 trading days. This significant drop indicates renewed worries among investors concerning the company’s aggressive expenditure on both AI infrastructure and its Reality Labs division.
The fundamental question raised by such a drastic decline is whether this downturn represents a temporary hurdle or a symptom of deeper issues in the company’s long-term narrative, especially in light of broader fears about an “AI bubble.”
We will explore this further in the sections that follow. Nevertheless, if you are looking for potential gains with reduced volatility compared to investing in a single stock like META, consider the High Quality Portfolio. It has consistently outperformed its benchmark—a mix of the S&P 500, Russell 2000, and S&P MidCap indexes—and has recorded returns exceeding 105% since its launch. What accounts for this? As a collective, HQ Portfolio stocks have delivered superior returns with lower risk compared to the benchmark index; it provides a smoother investment experience, as demonstrated in HQ Portfolio performance metrics.
Before assessing its downturn resilience, let’s examine where Meta Platforms currently stands.
These indicators suggest a Very Strong operational performance, combined with a High valuation—leading to the stock being considered Fairly Priced. For further information, see Buy or Sell META Stock
The Double-Edged Sword of AI Investment
Meta has established itself as one of the most eager investors in the AI race, with commitments for U.S. data centers and AI initiatives nearing $600 billion over the coming years—a pace that far exceeds many of its competitors.
- The Bull Case (The Advantage): CEO Mark Zuckerberg sees this expenditure on AI as revolutionary and essential, supporting future product innovation, online experiences, and business value. He has consistently emphasized that he prefers the risk of over-investing over the risk of being tardy to what he deems “the most critical technology in history.”
- The Bear Case (The Threat): The unparalleled scale and rapidity of these investments are raising concerns that Meta could be ensnared in an AI bubble. Detractors note the potentially lengthy timelines before these substantial AI expenditures can yield meaningful financial returns, particularly amid fierce competition and the complexities of perfecting new AI products.
Core Business Headwinds and ROI Uncertainty
The risk is exacerbated by a deceleration in Meta’s core business growth, especially in ad revenue, which acts as the main cash driver funding the AI and Reality Labs investments.
This slowdown triggers significant investor concerns: Can Meta maintain this level of spending without severely impacting current profitability or being compelled to take on excessive debt?
While Meta’s liquidity remains robust, its strategic direction in AI introduces more uncertainty. Unlike Amazon, whose vast cloud infrastructure (AWS) is easily monetizable across various enterprises, Meta’s AI initiatives primarily center on product development. This product-focused strategy makes predicting near-term Return on Investment (ROI) inherently more challenging.
This leads us to the crucial consideration for investors anxious about this decline: how resilient is META stock if market conditions worsen? This is where our downturn resilience framework becomes essential. If META stock drops another 20-30% to $418—can investors remain comfortable holding it? It appears that the stock has performed worse than the S&P 500 index during various economic downturns, based on (a) how much the stock fell and (b) how swiftly it recovered. Below, we take a closer look at each downturn.
2022 Inflation Shock
- META stock experienced a decline of 76.7% from a peak of $382.18 on 7 September 2021 to $88.91 on 3 November 2022, compared to a peak-to-trough decrease of 25.4% for the S&P 500.
- However, the stock fully bounced back to its pre-Crisis high by 19 January 2024.
- Since that time, the stock rose to a peak of $790.00 on 12 August 2025, and it is now trading at $597.69.
META Stock Performance During The 2022 Inflation Shock
Trefis
2020 COVID-19 Pandemic
- META stock fell by 34.6% from a peak of $223.23 on 29 January 2020 to $146.01 on 16 March 2020, versus a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 20 May 2020.
META Stock Performance During The 2020 COVID-19 Pandemic
Trefis
2018 Correction
- META stock saw a decline of 43.0% from a high of $217.50 on 25 July 2018 to $124.06 on 24 December 2018 compared to a peak-to-trough decline of 19.8% for the S&P 500.
- Nonetheless, the stock fully recovered to its pre-Crisis peak by 9 January 2020.
META Stock Performance During The 2018 Correction
Trefis
Anxious about META stock? Consider a portfolio approach.
A Multi-Asset Portfolio Outperforms Solely Picking Stocks
Individual selections can be volatile, but diversified assets can balance each other out. A multi-asset portfolio enables you to remain steady, capture gains, and mitigate losses.
The asset allocation strategy of Trefis’ Boston-based wealth management partner resulted in positive returns during the 2008-09 period when the S&P lost over 40%. Our partner’s current strategy includes Trefis High Quality Portfolio, which has a proven history of comfortably exceeding its benchmark that includes all three – the S&P 500, S&P mid-cap, and Russell 2000 indices.
Moreover, you could consider the Trefis Reinforced Value (RV) Portfolio, which has also outperformed its all-cap stocks benchmark (a combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to offer substantial returns to investors. What’s the reason? The quarterly rebalanced assortment of large-, mid-, and small-cap RV Portfolio stocks provided a flexible method to leverage positive market conditions while minimizing losses when markets dip, as elaborated in RV Portfolio performance metrics.
