Meta Platforms Chief Executive Mark Zuckerberg's big AI spending plan shows confidence in the social media giant's current trajectory but also ups the stakes for the company's upcoming second quarter earnings report, a Meta stock analyst with Bank of America said Tuesday.
BofA Securities analyst Justin Post raised his price target for Meta stock to 775, from 765, in a client note. The note followed a Threads post from Zuckerberg on Monday, where he said Meta will spend "hundreds of billions" on AI infrastructure to support its AI efforts. That includes a goal to unlock AI superintelligence. Meta also plans to build several multi-gigawatt data centers.
"We view the comments as a sign of confidence in Meta's revenue trajectory, while the scale of investment implies higher future capital expenditures and operating expenses," Post wrote to clients Tuesday. "We also see the post as reaching out to AI talent, signaling Meta as a place for AI innovation. We expect AI investment to be a top focus area on the upcoming earnings call, and Meta likely needs to make a case for strong AI returns to drive (price-to-earnings) multiple expansion."
Meta will report second quarter earnings on July 30.
Post raised his estimates for Meta's 2025 revenue by roughly 1%, citing improved economic conditions and improvements to Meta's advertising technology. But he also slightly lowered his estimates for Meta's 2026 adjusted earnings by a fraction, citing higher research and development costs.
Post is confident the company can make the case for the increased spending. He reiterated a buy call for Meta stock.
"We think Meta's AI investments can drive product-driven advertising upside — spend automation, personal targeting, messaging services, etc. — which could further boost optimism," Post wrote.
Meta Stock: AI Spending
The AI infrastructure spending pledge from Zuckerberg followed Meta's recruitment of several researchers from OpenAI and other competitors to launch a lab dedicated to AI superintelligence. Meta also recently struck a deal to invest $14.3 billion in the startup Scale AI. The start-up's former Chief Executive Alexandr Wang joined Meta to lead the new AI research lab.
Zuckerberg told investors in April that the company plans to spend about $68 billion in capital expenditures this year. That compares to $39.2 billion in 2024.
On the stock market today, Meta stock fell 1.5% to end at 710.39.
Meta stock is ahead 21.5% overall this year. It had posted the largest year-to-date gain among Magnificent Seven stocks entering trading Tuesday. But with a big jump Tuesday, Nvidia stock's gains in 2025 now exceed Meta's.
Meta has an IBD Composite Rating of 97 out of a best-possible 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating.
