Meta shares tumble as Avocado AI model underperforms, sparking weak earnings concerns

Meta’s earnings outlook has taken a hit as the company’s flagship Avocado AI model failed to deliver the performance boost investors had anticipated, sending the stock sharply lower in after‑hours trading, according to a report by Meyka. The dip was immediate: Meta shares slid more than 10% in a single session, a move that analysts at Forbes described as “a stark reminder that the firm’s AI ambitions are still in a testing phase” (Forbes, “Meta Stock Drops 10%, How Low Can It Go?”).

The underperformance of Avocado has broader implications for Meta’s profitability trajectory. In a separate Forbes piece, the outlet noted that Meta’s fourth‑quarter earnings fell short of expectations, with profitability slipping enough to push the stock down more than 20% in after‑hours trading (Forbes, “Meta Stock Falls Over 20% After Metaverse Project Loses …”). While the report did not isolate the AI model’s contribution, the timing suggests that the disappointing results from Avocado amplified concerns about the company’s ability to monetize its AI investments amid a broader slowdown in ad revenue.

Investors are now questioning whether Meta’s AI strategy can offset the lingering challenges of its metaverse push. The same Forbes analysis that highlighted the stock’s steep decline also warned that the “metaverse project” continues to drain resources without delivering a clear path to revenue, compounding the pressure on the balance sheet (Forbes, “How Bad Can Things Get For Meta Stock?”). Analysts cited in the article argue that the Avocado shortfall may force Meta to re‑evaluate its AI rollout timeline, potentially delaying the rollout of new features that were expected to drive higher engagement and, ultimately, ad spend.

The market reaction underscores a growing skepticism that Meta can sustain its growth on AI alone. While the company has invested heavily in large‑scale models, the lack of concrete performance data for Avocado leaves investors with limited confidence in the near‑term earnings upside. As Forbes’ coverage points out, the stock’s volatility reflects a “wider narrative of uncertainty” surrounding Meta’s ability to translate its AI research into profitable products (Forbes, “Meta Stock Drops 10%, How Low Can It Go?”). Until the firm can demonstrate measurable returns from Avocado, the pressure on its share price is likely to persist.