Legal risks multiplied AI spending, and Meta's market value evaporated by $280 billion, sparking concerns of a tobacco industry-style risk.

Sina Finance reported on March 31st that at the beginning of the year, Meta Platforms Inc. still seemed to be one of the best-performing large tech stocks in the market. However, concerns from investors about legal risks and the huge expenditures on artificial intelligence are emerging, ultimately leading to a sharp 11% drop in the stock price last week. The stock price of this parent company of Facebook and Instagram has fallen by a total of 17% this month, on track to deliver its worst monthly performance since October 2022. At that time, Meta provided a disappointing revenue outlook, and CEO Mark Zuckerberg pleaded with investors to be patient with the company's expanding spending on the metaverse. Now, Meta is downplaying the concept of the metaverse and shifting its focus to artificial intelligence. However, concerns about its out-of-control spending have only intensified. While many believe it may be too early to draw conclusions, Wall Street is now trying to assess the possibility of social media companies facing a similar risk of contraction as the tobacco industry did after stricter regulations on smoking were introduced. Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder, said, "I don't necessarily think this is the same as the tobacco industry, but stranger things have happened." The firm, which manages about $11 billion in assets, holds Meta stock. Ghriskey spent the early years of his career researching the tobacco industry and has spent a significant amount of time assessing litigation risks.