Morgan Stanley Eyes Good Things Ahead for Meta After $18 Billion Legal Settlement

Meta resolved its youth social media addiction lawsuit by agreeing to pay up to $18 billion over ten years, removing a major overhang on the stock.

Morgan Stanley's Brian Nowak compared Meta to Alphabet, suggesting the settlement could free management to accelerate AI product launches and boost long-term earnings.

Meta Platforms NASDAQ: META just settled a legal headache that has cast a significant shadow over the firm and the stock. The company agreed to pay up to $18 billion over the course of a decade to end its youth social media addiction trial.

Morgan Stanley Thinks Meta Could Walk in Alphabet’s Footsteps Brian Nowak of Morgan Stanley anticipates that the end of the trial will usher in a wave of new product releases at Meta. This would represent a positive development for the firm, as a notable issue with the company’s AI strategy is the relatively few product releases it has announced with real revenue-generating potential.

Nowak has a laundry list of products he believes are in Meta’s pipeline. This includes agentic advertising tools for businesses, subscription offerings, a better version of Meta AI, and a potential cloud business. Nowak estimates that these products and services could add $10 to Meta’s earnings per share (EPS).

Notably, in 2025, the company’s adjusted EPS was $29.68, and its GAAP EPS was $23.49. Depending on which metric Nowak is referencing, his forecast implies a 34% to 43% uplift in these figures.

Nowak cites Alphabet’s NASDAQ: GOOGL recent history as a reason Meta could start releasing more products now. This time last year, Alphabet resolved its antitrust case with the Justice Department, after which it began releasing many AI tools and models. The stock went on to perform very well in Q4 2025, rising 29%.

While Meta’s overall number of AI product releases has been underwhelming, the company has made some meaningful progress on this front recently. In the last five months, Meta has released five new Muse models, including Muse Glimmer and its latest Muse Spark 1.3 in September. This pace of model releases is impressive, rivaling the cadence of OpenAI and Anthropic.

Additionally, Meta is now charging for access to its models on a pay-as-you-go basis, which could meaningfully contribute to revenue. This comes as Muse Spark 1.3 ranks highly on a variety of key AI model benchmarks.

According to model evaluation by Artificial Analysis , Muse Spark 1.3 ranks only below OpenAI and Anthropic’s frontier models on its Intelligence Index. The closer Meta can stay to OpenAI's and Anthropic’s models in terms of intelligence, the more likely it will be to attract paying users.

Furthermore, Meta’s ability to attract paying users should be aided by the model’s much lower price. Artificial Analysis places Muse Spark 1.3’s cost per Intelligence Index task approximately 50% to 80% below OpenAI and Anthropic’s frontier models.