Meta Platforms, Inc. has made a significant advance in the artificial intelligence sector with its acquisition of Singapore-based AI startup Manus for over $2 billion. This transaction marks the largest acquisition in the AI industry to date. However, this strategic move comes amidst substantial legal challenges, complicating the landscape for investors. Meta’s shares closed at $650.41 on Friday, approximately 8% below their annual peak.
A lawsuit filed in late December 2025 by the U.S. Virgin Islands has added considerable uncertainty to Meta’s outlook. The litigation alleges that the social media giant knowingly profited from fraudulent advertising on its platforms. Notably, the suit claims that internal company data may indicate Meta generated up to $16 billion from so-called “scam ads” in 2024, accounting for nearly 10% of its total revenue that year. These allegations raise critical questions about potential financial penalties and long-term reputational damage, leading the market to speculate on the ramifications.
The acquisition of Manus signifies a strategic pivot for Meta in its AI endeavors. The startup contributes an estimated $100 million in annual recurring revenue, suggesting that Meta paid a multiple of around 20 times sales. Manus offers a technology capable of processing 147 trillion tokens and has generated 80 million virtual computers.
More importantly, the deal indicates a shift away from Meta’s historical commitment to open-source AI models, such as LLaMA. The company is now focusing resources on developing proprietary commercial models designated as “Avocado” and “Mango,” aimed specifically at the competitive AI agent market. Meta plans to integrate Manus’s technology into its next significant AI model, with a target launch date in mid-2026.
Operationally, Meta’s core business continues to exhibit strong performance. In the third quarter of 2025, the company reported earnings per share of $7.25, surpassing analyst expectations of $6.74. Quarterly revenue increased by 26.2%, reaching $51.24 billion, driven by a 14% rise in ad impressions and a 10% increase in average ad prices.
Despite these encouraging figures, caution has emerged among investors. Chief Operating Officer Javier Olivan sold shares valued at approximately $340,000 in late December, an action that often draws scrutiny, particularly during periods of legal scrutiny.
Market analysts maintain a generally optimistic outlook for Meta. Morningstar has assigned the stock a fair value estimate of $850, while Piper Sandler reaffirmed its “Overweight” rating with a price target of $840. Their optimism is founded on the belief that Meta’s advertising business will likely experience continued growth in 2026, bolstered by AI-powered tools. With a current price-to-earnings ratio of 29.2, which is below its historical average, some analysts view the stock as potentially undervalued given its future growth prospects.
As Meta navigates its ambitious expansion in artificial intelligence while contending with a challenging legal landscape, the company’s ability to balance innovation with compliance will be critical in shaping its trajectory. The unfolding situation invites scrutiny not only from investors but also from regulatory bodies as the implications of its operations come into sharper focus.
For further details on Meta’s strategic initiatives and market performance, visit Meta.
To understand the broader context of AI development and acquisitions, check out insights from OpenAI and IBM.
In summary, as Meta continues to drive forward in the AI landscape, the outcomes of ongoing legal challenges may significantly influence its strategy and investor confidence.
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