Meta eyes major annual spending on Anthropic AI tools: Here’s what to know

Alphabet and Meta have seen significant market cap declines, with investors concerned about AI spending and company-specific issues. Alphabet's market cap has dropped by $692B since May, while Meta has lost over $500B in the past year. Meanwhile, Nvidia's stock surged 10% after strong earnings, up 23% in 2026, with a market cap of $5.5T. Both Alphabet and Meta face challenges in demonstrating returns on their AI investments.

Meta (META) settled youth-addiction claims for $12.6 billion, below the feared $200 billion. Analysts' price targets average $754, 30% above Wednesday's close. The settlement's present value is less than Meta's legal defense costs. Meta's shares are down 12.57% year-to-date.

Meta agreed to a $17 billion settlement with 29 US states, avoiding a trial. The company will implement changes to Instagram and Facebook, such as curfews and restrictions for young users. Meta's stock rose after the announcement, but the fine is less than 10% of its annual profits. The settlement does not require Meta to admit wrongdoing.

Meta agreed to pay $12.6B to settle a case with 29 US states over allegations of misleading the public about the mental health risks of its platforms for children, according to CNBC. The settlement includes usage limits and age-verification measures for teenage users on Facebook and Instagram. 7% of the settlement will be paid immediately, with details disclosed in a court filing during a federal trial in California.

Alphabet (GOOG) reported $119.8B revenue, up 24%, with Google Cloud growing 82% and EPS beating estimates. Meta (META) posted $60.8B revenue, up 28%, but missed EPS estimates due to rising expenses. Alphabet trades at 17x earnings, up 67% YoY, while Meta trades at 21x, down 26% YoY.

Meta's settlement with states requires a minimum $12B payment, potentially rising to $17B if TikTok and YouTube adopt similar changes for younger users.