META Stock Drops after ‘Avocado’ AI Model Trails Competitors — Should Investors Worry?

Meta Platforms’ META -3.83% ▼ stock fell almost 4% on Friday after reports stated that the company pushed back the launch of its new artificial intelligence (AI) model, called “Avocado.” The New York Times, citing people familiar with the matter, reported that the company had planned to launch the model this month but has now pushed the timeline to at least May. According to reports, the model has not yet matched the performance of some of the latest systems released by competitors.

Claim 70% Off TipRanks Premium

• Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions

• Stay ahead of the market with the latest news and analysis and maximize your portfolio’s potential

Investors likely don’t need to panic over the delay. Companies often postpone AI model launches to improve performance, especially in a highly competitive space where quality matters. However, the setback could raise short-term concerns if it signals deeper challenges in Meta’s efforts to keep pace with rivals like Alphabet’s GOOGL -0.42% ▼ Google in the fast-moving AI race.

Why It Matters

Meta’s “Avocado,” expected to function as a large language model (LLM) like OpenAI’s ChatGPT and Google’s Gemini, is a key part of the company’s strategy to compete in the AI space. Early reports suggest the model’s capabilities currently fall somewhere between Google’s Gemini 2.5 and Gemini 3, although full details have not yet been disclosed.

A Meta spokesperson told Reuters that the company’s next model will demonstrate how quickly its AI technology is improving. The spokesperson added that Meta plans to keep advancing its models throughout the year as it rolls out new updates.

Still, the development has faced challenges. The report stated that leaders within Meta’s AI division have even discussed the possibility of temporarily licensing Gemini technology to support some of the company’s AI products, though no final decision has been made. The timeline for the “Avocado” model has shifted several times. Earlier reports indicated Meta hoped to launch it in 2025, but that plan was later pushed to early 2026.

What Lies Ahead for Investors?

The delay of Meta’s new AI model highlights some internal challenges, but it doesn’t alter the company’s long-term position in AI. For long-term investors, this is more of a temporary setback than a major red flag.

Overall, Meta’s AI strategy has evolved significantly in 2025 but still appears somewhat unsettled. For 2026, Meta Platforms projects capital spending of $115–$135 billion, almost twice last year’s $72.2 billion outlay. While the company’s size, resources, and focus on AI provide a significant advantage, how well it executes its plans will be more critical than ever in 2026.

For now, the bigger picture for META still depends on how quickly the company can strengthen its AI capabilities and turn those investments into products that drive growth across its platforms.

Is META Stock a Good Buy Now?

Turning to Wall Street, Meta’s shares have a Strong Buy consensus rating on TipRanks. This is based on 39 Buys and five Holds assigned by 44 Wall Street analysts over the last three months. Furthermore, the average META price target of $858.86 indicates a 40% upside potential from its current price.

Disclaimer & DisclosureReport an Issue