Artificial intelligence has been a persistent sticking point for Meta Platforms but its problems compared with the other Magnificent Seven stocks have been greatly exaggerated.
Meta stock tumbled 3.8% on Friday on a report that the Facebook and Instagram parent was delaying the release of its upcoming AI model after it failed to perform as well as rivals. Meta may even consider temporarily licensing Google's Gemini for use in its products, the New York Times reported, citing unnamed sources.
Meanwhile, Reuters reported Saturday that the company was planning layoffs that could affect 20% of the company's nearly 80,000 employees. When approached for comment on the report, Meta spokesperson Andy Stone dismissed it as "speculative reporting about theoretical approaches."
The social media giant is among the foremost hyperscalers -- companies spending massive amounts of money to build out data centers. Companies may be forced to conduct layoffs as they look for ways to cut amid ongoing capital expenditures.
As of January, Amazon.com is conducting its largest-ever round of layoffs. CEO Andy Jassy suggested in a 2025 blog post that AI would enable the company to permanently reduce the size of its workforce.
Cost-cutting would be another obvious explanation. Amazon, Google parent Alphabet, and Oracle already have issued debt this year to finance AI capex, which historically has come from free cash flow. Meta and Microsoft so far have not.
All the Magnificent Seven stocks -- a group consisting of Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla -- are in the red this year, falling in line with the broader market, though some have been hit harder than others.
Notably, more than half of those names are hyperscalers that have ramped up spending to build out AI infrastructure in recent years. Meta, down 7% in 2026, lands near the middle of the pack.
Amid the backdrop of heavy spending, the company's AI effort is a "show me" story that has yet to pan out. Meta hasn't released a truly consequential AI model since Llama 3 in 2024. While the company released two versions of its successor, Llama 4, last year, these were smaller models designed to run on limited hardware.
Meta pledged to follow the models up with a larger edition called "Behemoth," but updates have fizzled out on that front.
Still, the stock isn't faring as badly as some other hyperscalers in the Mag Seven. Microsoft, for instance, has declined 18% this year, most recently shaken by concerns over AI disruption to its legacy software business. Amazon has fallen 10% over the same period.
Others have fared better, like Alphabet, down just 3.4% for the year. This compares with a 4.9% loss for the tech-heavy Nasdaq Composite.
